Report No. 34750-IN India Indias Water Economy: Bracing for a Turbulent Future December 22, 2005 Agriculture and Rural Development Unit South Asia Region Document of the World Bank ACKNOWLEDGEMENTS T h reportwas preparedbyJohn Briscoewho was the Water Advisor for the SouthAsia Region. The report benefited greatly from formal reviews and comments from external reviewers (Suresh Prabhu, Peter Rogers, Ramaswamy Iyer ,George Verghese, Tushaar Shah, Maria Saleth, Vijay Vyas, Ramesh Bhatia, Ravinder Malrk andNirmalMohanty) and WorldBankstaff: (Sumir Lal,SanjayPahuja, S d IGosla,RS Path& PrabirJoardar, Grant Mdne, Connie Bernard,Maruen van Nieuwkop, Gajan Pathmanathan, Dina Emah-Deininger,Manuel Contijoch, I50% 20% 30% 50% % of cropped areawhich is irrigated Figure 12: How irrigation reduces poverty in India Sour- Rao 1888.#nWoiid Bank 4894 S d a r l y the relationship between electricity availability (much of which came from hydropower) and poverty i s strong (Figure 13). go ~"..."....."..."....-I.... 80 70 . .... .... " ." ...,....,...... ..... ......l".." I l_l_l "" - 0 60 - \ ++ 50 - + a 40 - 0 0 30 - 20 - 10 - + \+ 0, 0 10 20 30 40 50 60 70 %wdhelectricty Figure 13. Electrification and rural poverty by state Overall global analyses show a very close relationship between economic growth and poverty reduction (Figure 14). In the specific case of India, growth did not generate more inequality20. And it i s abundantly clear that major water infrastructure, designed to provide a platform for regional and national economic growth, has been an important platform for the remarkable reductions in poverty in India (Figure 15) P 10 1973-74W 1993-94 0 1999-00 1 Rural Urban Combined Figure 15 : The decline in poverty in India 1973-2000 .... ^^^L So at the end of the day it is less material (a) whether such projects are justified in terms of poverty reduction or (b) whether the primary recipients of the "first-round benefits" are those with land. Because the record i s o v e n v h e h n g l y clear -investmentsinwater infrastructure in India have resulted in massive reductions in poverty, and it is actually the poor and landless who have been the biggest beneficiaries. T h e appropriate metaphor i s not "trickle-down" but a rising tide l i f t s (almost) all boats". T h e 1960s was a turning point in India's agricultural development. T h e Green Revolution provided great benefits to those who could adopt new seeds and ferthzers - for which water control was an essential pre-condition. Large investments in surface water projects were undertaken to provide an assured water supply to larger numbers of farmers. Starting in the 1960s, however, a couple of critical changes took place. First, electricity supply expanded inrural areas (itself often linked to water, since hydropower provided over 50% of installed capacity unul the mid 1960s). Second, in areas where waterloggng and salinity was a growing problem (such as parts of Punjab) it was realized that encouragement of groundwater pumping provided an effective mechanism for lowering the groundwater table and reducing the severity of waterlogging and salinity. Third, modest n e w modular well and pump technologies became widely available, as did subsidized credit. Fourth, farmers realized that groundwater was abundant, especially in the large alluvial basins. Fifth, farmers reahzed that could apply water "just in time" from groundwater sources, something which was not possible in the institutionally-complex and increasingly corruption-ridden canal systems. T h e result was an extraordinary "quiet revolution", in which, begmning around 1960, groundwater irrigation developed at an explosive rate, as shown in Figure 16, while tank irrigation almost disappeared and surface water irrigation grew m u c h more slowly. !+Canal +Tanks +Wells 1 1950-51 1960-61 1970-71 1980-81 1984-85 1993-94 1999-00 Figure 16: The evolution of forms of irrigation in India 1950-2000 Bhalia 2005 Over time two other pressures developed. Irrigators who used tubewells argued that they were disadvantaged relative to those who received virtually free canal water. In Uttar Pradesh, for example (where electricity charges are relatively high, as shown in Figure 17, irrigating a hectare of wheat during the rabi season would cost about Rs 2,800 from groundwater, whereas farmers pay only about Rs 70 per hectare -- about 2% of the cost of pumping) for canal irrigation21. Politicians responded and soon there was a widespread culture of "free or nearly free" electricity for irrigators (see Figure 17). I I Gujarat All India Karnataka Bihar w Tarn Nadu hnjab 0 50 100 150 200 250 300 350 400 paise per kwh Simultaneously, the reliabdity of canal water supplies deteriorated, as systems were not maintained and as corruption became more widespread and the historic allocation systems such as warabandi and shejpali no longer functioned as effectively. This, too, motivated farmers to turn to groundwater. In large areas a primary function of surface water systems evolved into "involuntary" recharge of groundwater. In East and West Punjab it is estimated that 50% and 8O%, respectively, of groundwater i s recycled canal water. Over the last two decades, 84% of the total addition to net irrigated area came from groundwater, and only 16% from canals. Thus, as shown in Figure 16, at present the net area irrigated by private tubewells i s about double the area irrigated by canals. T h e fact i s that groundwater now supplies water to about 70% of the irrigated area, and about 80% of domestic water supplies. As emphasized in the background paper by Tushaar Shah22, "we need to recognize that self provision of water i s the best indcator of the failure of public water supply systems. Tubewells proliferate in canal commands because public irrigation managers are unable to deliver irrigation on demand. Urban households want their own boreholes because municipal service i s inadequate and unreliable". Figure 18 shows the proportion of groundwater potential which is developed in each of the major river basins of I n d a . WFR Inuf"6li.pi 23% < 10% 10% 30% 30% 50% -- > 50% Figure 18: Level of groundwater development by basin Source:Tyagi data GIs work courtesyo f IWMI - As dscussed elsewhere inthis report, the poor quality of public infrastructure is a pervasiveproblemin I n d a . Studes throughout the world23 have shown that where industries have to self-provide, costs of production go up sharply, competitiveness i s reduced and economic growth i s dampened. T h e self- provision of water supplies is just one manifestation of a far broader break-down in public infrastructure in India. A recent survey24 shows that 60% of Indian manufacturing entities have captive power generating units a figure which i s just 16% for China, 17% for Brazil and 42% for - Pakistan. This groundwater revolution brought immense benefits to Inda, playing a major role in the "irrigation/rural development/poverty reduction" achievements. That said, it i s increasingly clear that the groundwater revolution has run its course in the most productive agricultural and urban areas of the economy. There are, more specifically, two major sustainabhty challenges. First is the contentious issue of the energy subsides, and their inexorable increase (as the amount of electricity used in agriculture grew, as shown in Figure 19) to farmers for groundwater irrigation. Estimation of the real economic value of these subsides i s a cottage industry. Some see it as the fundamental problem facing the electricity sector. Accordmg to the Planning Commission25, while the agriculture sector accounts for nearly one-third of the sales of the State Electricity Boards, the revenues from farmers account for only 3% of total revenue. Others (as described in the background paper by Bhatia26) have a dfferent view, pointing out that simplistic estimates vastly overestimate the value of electricity subsides to agriculture. This is so first because the large transmission and distributionlosses (colloquially known as "theft and dacoitry") are routinely counted as free supplies to farmers. And second because the supplies to farmers are, in fact, off peak and highly unreliable and thus do not cost the electricity system anythmg hke the marginal or average cost of supply. T h e estimates of the total annual cost to the economy of subsidized power to farmers vary by a factor of 4. T h e World Bank estimates that subsides to farmers account for about 10% of the total cost of supply, or about Rs 240 bfion a yearz7 . This i s equivalent to about 25% of India's fiscal deficit and two and a half times the annual expenditure on canal IrrigauonZ8, with large impacts on fiscal deficits at the state level, as sho l - Figure 19: Increase in electricity consumptionfor agriculture Source Tyogi and CEA UP(mwer corp) RajaSthan(Transco ) Andhra Radesh 1 0% 20% 40% 60% 80% 100% Figure 20: Electricity Subsidy t o Agriculture as Percent of Gross Fiscal Deficit 2000-01 Bhatia 2005 And it is clear that things are getting worse, not better, inmost states, inpart driven by the deeper and deeper depths from which farmers have to pump water. In Gujarat, for example as shown in Figure 21, electricity subsides now dwarf other forms of farm input subsidies, and are equivalent to 20% of state agricultural domestic product29. ~ ~ ~ ~ , ~ ~ ~ , 5y-G5*vw*m ~ ~ ~ ~ 11 abstractions come into balance with sustainable yield and the depth is, say, 150 meters, then this makes irrigation impossible without large and permanent energy subsidies. This is a grave situation, the implications of which form the heart of the water challenges facing In&a in coming decades andwhich frames the central themes of this report. 2. Implicit in the discussion in the previous chapter was the notion that the emerging water challenges which India has to face are quite different from those which it has faced in the past. Inthe words of the Planning Commission (Sekhar, background paper) "Policies and practices have to come to grips with this basic fact - to face the future and not the past". Inexploringwhat some of these challenges rmght be, it is useful to consider the experience of water transitions in other countries. As part of a s d a r exercise which was done recently with the Government of China, the diagram in Figure 23 is instructive. It suggests that the focus on the provision of infrastructure has to, in different ways in dtfferent parts of India, b e supplemented by more effective management of that infrastructure and of the underlyingwater resource base. Developlng -b Developed Figure 23. Rates of returnon investment an infrastructure and mamgement of water resources It i s broadly recognized that Indta is currently in the early stages of a profound demographic, social and economic transition. T h e proportion of the population which i s urban has doubled over the last thirty years (and is now about 30%); agriculture now accounts for only about 25% of GDP; and the economy has been growingat around 7% a year. Life in rural areas i s already in the process of large-scale change, particularly in the higher-productivity areas. In parts of Maharashtra, for example, the transition to high-value agriculture is already underway for some time, with major implications for the use of technology, including water technology. Where a decade ago there was just one lonely company provicltng drip irrigation technology, the market i s expanding very fast, with half a dozen such suppliers now in Maharashtra alone. While state extension services stagnate, the private sector i s meeting the rapidly-growing demand: The original supplier of drip irrigation technology in the region i s now a major one-stop- shop for farmers, providingnot only equipment but training on a large scale. And there is now a travel agency in r u n e which speciakzes in "agro-tourism", organizing study tours for private farmers to go to Israel and other countries to learn about the latest in"precision agriculture"31 With these changes is coming a remarkable change in the way in which Indian agriculture is viewed. Rather than being seen as a dead-end and poverty trap, new visions of Indian agriculture are emerging. For example, one of India's telecom moghuls32 has said: "to my mind, the next bigwave -which d be bigger than telecoms or outsourcing - i s in agriculture. India's strength lies in its huge area of arable land, with great weather conditions. For three, four or five months Europe doesn't grow a fig - - butwe can grow anything. Iwant to connect India's farms to the world. Ibelieve an Indian farmers' income can jump from Rs 5000 per acre to Rs 20,000 straight away, just by moving away from rice and wheat.. .. tomatoes sell for just Rs 2 a lulogram at the farm gate in India, and more than 50 times that on the shelves of UI< supermarkets". These shifts from low-value to high-value agriculture have profoundimplications for the demand for labor and therefore for the well-being of the poor. Figure 24 shows the dramatic differences in direct labor demand between staples and many cash crops. RainfednIrrigated 300 250 f zoo 150 IK 100 C 0 tn 50 o Figure 24: Employment Generation by Crop Source Bhalla 2005 In many parts of the country (including the Communist-ruled West Bengal33) "contract farming" is becoming increasingly important, and shows great promise (as it has in other countries34) as a mechanism for bringmg unified packages of technology, services and marketing, in m a h n g the transition to high-valued agriculture, and in lifting large numbers of people - both those who stay in agriculture and those who move into the associated service sectors - out of poverty. T h e Financial Times35 has captured the essence of the changes underway in rural areas: M o r e than a third of India's rural households already derive their income from manufacturing or services, not from farming; in the successful farming states of Punjab and Haryana already over half of all rural households have escaped agriculture altogether and "the best way to escape poverty i s to escape agriculture"36. These transformations are, of course, happening organically on a massive scale -- in coming years close to 100,000 people a day wdl enter the middle class37. Many of these people dlive in revitalized rural areas, but many dinevitably live in towns and cities. These changes have profoundimplications for the ways in which water needs to b e allocated and used. I t is essential that the avadabllity of water does not constrain the development of new types of economic activity in n e w places. And here there is a serious mis-match between the water ideology of the past in India - one that operates on a paternal system of command-and-control, with little transparency and little accountabllity - and the requirements of the present and future. As summarized by VS Vyas (background paper): 'With increase inpopulation and changes in life style, the gap between water demand and supply i s getting aggravated, leadng to disputes among various users". As a part of this Report, the WorldBank, workmgwith a group of eminent Indian scholars, undertook a major analytic study to examine the economic irhpact of flexible rather than rigid water allocation practices in T a d Nadu38 where there i s already strong evidence of the effect of water shortages on industrial choices. In a drought during the 1990s, for example, major chemical and f e r d z e r plants outside of Chennai were closed for six months39 because they could not get water; and it i s clear that decisions on location of industries in the state is being affected by water availabhty40. T h e results of the study are striking, suggesttng that if flexible rather than rigd water allocation procedures were adopted: 0 Water use would be dramafically dfferent: o totalwater use wouldbe 15% lower (Figure 25) o abstractions from aquifers (which are already under great stress in the state) wouldbe 25% less o water use in agriculture sharply reduced, while water for mdustry and urban uses wouldincrease substantially (Figure 25). Figure 25 Total and Sectoral Water Use in 2020 Under Two Management Scenarios Bhatia et ai 2005 ~ 0 And economic performance, too, wouldbe quite different (Figure 26): o State income in2020 wouldbe 20% hgher; o Urban household incomes would be 15% to 20% higher for all four categories included; o There would be small losses in income for f a d e s who remained self-employed farmers and for laborers who stayed as agricultural workers, but rural incomes wouldbe 15% to 20% higher for self-employed and non-agricultural labor. w M/. AN- Figure 26. Difference in income in Tamil Nadu in 2020. Flexible compared to fixed water allocations Bhotia et .I 2005 T h e writing, then, is on the wall - India i s changing very fast, and there are great environmental and economic benefits from transforming the Indian water economy into one that i s far more flexible and adaptive. As this transition takes place, the development of a vital and efficient urban water supply and sanitation sector i s a major challenge. A companion report by the World Bank41 examines the challenges that India faces in meeting the Millennia1 Development Goals. A succinct summary i s that India's water and sanitation sector i s woefully &equipped to meet this growing challenge. T h e sector has no identity, i s bankrupt, i s not developing the required human resources, and focuses primarily on adding infrastructure, not improvingservices. In 1999 the National Commission on Waterd2 assessed the overall availabllity of water, the hkely demands, and the implied "water available for future use" (Figures 27 and 28). I II 1997 2010 2025 2050 Figure 27. Utilizable water, demandand residual which is available but not used Natianai Commissionon Wetel I999 IOSurface HGroundwater1 E 500 c a c 2 400 2 Q 300 5 200 5 .-n 0 :100 0 1997 2010 2025 2050 Figure 28: "Unused"surface and groundwater National Commission on Water 1999 These figures are a stark and unequivocal portrayal of a country about to enter an era of severe water scarcity. And there are a host of realities which make the situation far worse than depicted in Figures 27 and 28. First, water is not a national issue, but an intensely local one. Aggregates thus conceal m u c h more severe situations in many localities (and less severe ones in others). Already 15% of aquifers are in critical condition, a number which i s projected to increase to a frightening 60% by the year 2030. Second, in its deliberations the National Commission of Water gave little attention to environmental realities and need@. It therefore implicitly assumed that the quantum of available water would be constant, despite the fact that ever-larger stretches of rivers in India are becoming so polluted that their water can be used for fewer and fewer uses and the quality of water in an increasing number of aquifers i s being s d a r l y degraded by human use and saline intrusion44. Thd, there are strong indcations that clunate change is likely to affect India in a number of ways. There is little uncertainty about some of these impacts. As global temperatures continue to rise, this will affect the "water banks" (glaciers) which are a prominent part of the Himalayan water systems. While there i s clear evidence of de-glaciation across the whole of the Himalayas the effect on river flows is likely to be substantially different in different areas45, as shown in Figure 29. lndurat Slwrdu Brahmaputraat Singing 60 so 40 30 m m 70 Simulated effects of deglaciationon Himalayanriver flows over ten decades Gwyn Rees et al 2005 In the eastern Himalayas, high levels of snowfall appear to retard glacial retreat and runoff generated in the non-glaciated areas rapidly lessens the downstream impacts (see for example see the modest impacts on the Brahmaputra, before the river dtsgorges from the Tibetan Plateau into Arunachal Pradesh). In the west, as dustrated by the Indus, where precipitation i s lower and the volume of snow at high elevations does not protect the glaciers in the hot summer months, deglaciation i s m o r e rapid (see Skardu, for example, where there are large increases in flows for the next half-century, followed by up to 50% reductions from contemporary levels of runoff), and the impacts are felt for a considerable dtstance downstream (with Indus flows predicted to be around 30% less in the northern plains of Pahstan). In the Ganges there would be large impacts of deglaciation in the mountains (see Haridwar on Figure 29), effects which are mitigated by non-glacial forms of runoff in the plains (as illustrated for Allahabad on Figure 29). Deglaciation is, of course, not the only way in which clunate change i s hkely to affect the availabdtty and timing of runoff in the sub-continent. T h e Intergovernmental Panel on Clunate Change (IPCC) uses ten General Ckculation models, nine of w h c h project that precipitation during the summer monsoondincrease substantially (Figure 30). h $- 25 I I 0 1 2 3 4 5 6 7 8 9 Model Figure 30: Change in South Asia summer rainfall predicted by nine General Circulation Climate Models Ipcc T h e IPCC has used a regional model (curiously based on the one global model which showed reduced precipitation) to explore possible changes in the number of rainy days and in extreme rainfall. This model predcted a decrease in the number of rainy days (Figure 31) but substantial increases in extreme precipitation events (Figure 32). What does seem likely i s that clunate change wdl increase the variabhty of already highly-variable rainfall patterns, requiring greater investments inmanagmg both scarcity and floods. -.? "I--.I ?& T i * a&! dr a&: .X /rj_ Figure 31 Predicted change in number of rainy days from the Figure 32. Predicted change in rainfall intensity (in mm per day) 'decreased rainfall"IPCC model PCC from the "decreasedrainfall" IPCC model Fromthis fog of information the following conclusions emerge very clearly: a T h e area affected by floodmg, which has not changed systematically in decades (Figure 33) i s llkely to increase substantially since many of the flood-prone areas (Figure 34) dbe affected by changes in glacial behavior and precipitation in the Himalayas. ooding are vulnerable to climate change TVM~ There are major regions, including many of the most highly producttve agricultural and mdustrial regions of India, where water scarcity i s already a fact of life (illustrated with increasing frequency in cartoons in Indian newspapers, such as Figure 35, by Binay in the Business Standard). Figure 35 Runningout of groundwater Binavin the Business Stwdard a Water scarcity i s going to become widespread in India in a Euture which is, given the fact that changing water use habits takes decades to effect, just around the corner. De-glaciation i s going to resulting in inadvertent "mining" of the water banks of the Himalayas. This i s going to result in a runoff windfall for a few decades, to b e followed by major, permanent, reductions in runoff. C h a t e change i s likely to substantially increase overall monsoonal rainfall in India, but this is hkely to be poorly distributed in the sense that m u c h of the additional rainfall i s likely to be in hgh-intensity storm events. What, then, are the implications of these changes? Despite the many uncertainties, they include: 0 A need for large investments in water storage. As described earlier, India actually has relatively little capacity to store water. For example, whereas there i s about 900 days of storage capacity on the Colorado and Murray-Darling Rivers, there i s only about 30 days of storage capacity in most of India's river basins. Accordingly major investments need to be made to increase capacity to store water, in both surface and groundwater reservoirs, in projects small (such as local rainwater harvesting) and big (such as large dams). Inso doing, however, there is a need for concomitant adoption of quite different development and management strategies. Inaddition to expanding irrigated area (the principal justification for most projects) care needs to be taken to safeguard existing downstream uses, and attention also needs to be paid should primarily be for improving the reliabdtty of supplying existing demands and for meeting historically deprived environmental uses. T h e melting of the glaciers offers India a window of opportunity, first, to make productive use of this "windfall", but also to understand that this window should be used to prepare for the very hard days, with substantial flow reductions in the Himalayan region, which lie ahead. While the exact shape of the future clunate regune i s uncertain it i s very likely that there will be greater variabdtty -bothofdroughts and floods. As was shown in a detaded examination by the National Atmospheric and Oceans Administration of U S water practices, the best preparation for managing unpredictable future changes i s to put in place a water resource infrastructure and management system which is driven to a much greater degree by knowledge (including but not h t e d to hydrologic knowledge), and which i s designed and operated to be m u c h more flexible and adaptive. Flooding, which already affects large areas of the poorest parts of India (including Bihar and the east), has yet to b e effectively addressed. T h e standard response in India has been to build embankments and to advocate the construction of large dams and embankments as the solutions to the problem. India i s only now startingto explore the combinations of "hard" interventions (to protect high-value infrastructure) and "soft" interventions (smart adaptation to living with floods, including changing in land use patterns and cropping patterns, and construction of emergency shelters for people and animals), which have been used to considerable effect in countries as diverse as the United States46 and Bangladesh47and are globally-accepted best practice. 0 With respect to scarcity, there is a pervasive complacency - "we have muddled though up to now and we will find a way to muddle through in the future" - on the part of many in government and citizens. This has been compounded by the recent perception (which is likely to be temporary) that "the Indian economy i s no longer dependent on the vagaries of the monsoon''48. This mudang through has worked because it has been possible for farmers, city-dwellers and industries to "exit"49 from unsatisfactory public supply systems by tapping once-abundant groundwater. But now the well i s running dry, and with it the exit option is becoming tenuous in more and more parts of the country. T h e twin challenges, to which w e return later in this report, are: to greatly improve the robustness and flexibdtty of water resource management systems; to improve the flexibility and quality of service provided by the major public water supply and irrigation systems; and to develop government/citizen partnerships for managing groundwater ina sustainable manner. Conflicts over water are so ancient that the idea i s incorporated into language: the word "rivals" i s derived from the Latin rivalis, meaning "the one using the same stream as another"j0. In the sub- continent, too, there i s a longhistory of water conficts. T h e origin of Buddhismi s related to a water dispute between the kingdoms of Shakya and Koliya. Prince Siddharth tried to resolve this by negotiation and compromise, but failed. T h e Peoples' Assembly of Shakya declared war on Koliya and asked Siddharth to leave the states'. So conficts over water are not new, either in the world or in India. But there i s no question that the incidence and severity of conficts has increased sharply in recent times. Over the past year the Union Minister of Water Resources has remarked that ``I a m not Minister of Water Resources but really Minister of Water Conficts", and the Union Finance Minister has noted a "growing set of small civil wars" over water at all levels in Indian societyjz. I tis useful to unbundle this growingset of conficts, from the international down to the local level Conflicts at the international level: At the international level, India has been a. party to several water treaties which are widely considered to be global good practice. Most notable, of course, is the Indus Treaty of 1960 which allocates the waters of the Indus, Jhelum and Chenab to Pakistan (while allowing run-of-the-river hydro on the headwaters before the rivers enter Pahstan), and the waters of the Ravi, Beas and Sutlej to India. T h e central feature of the Indus Treaty i s that the rights (and obligations) of both parties are unambiguously defined. This clarity and the permanence of the assignment of rights has meant that the two countries have concentrated most of their attention on using what i s theirs effectively, rather than haggling over their entitlements53. S d a r l y important i s the Ganga Water Treaty between India and Bangladesh of 1986, which once again rests on an agreed-upon allocation of low flows among the parties and in which seasoned bilateral dlplomats were able to find a n "acceptable second-best'' solution for both parties54. A somewhat different but equally interesting case is that of "benefit- sharing" arrangements for development of the hydropower resources of Bhutan55, which has shown the way for mutually beneficial development between India and its smaller Himalayan neighbors. In the international arena, then, India has forged a number of examples of good practice; now there i s a need to modernize some elements of these treaties (especially the conflict resolution mechanisms) and to put into place more such agreements on the substantial number of rivers where agreement between India and her neighbors has not been reached. Conflicts at the inter-state level: At the next level down, among the States of the Indian Union,the situation is much less satisfactory. T h e issue i s pervasive, since 90% of the land area of India i s drained by inter-state rivers. Under the Constitution authority is conferred on the UnionGovernment with respect to regulation of inter-State rivers: (Entry 56, L i s t I)states that "Regulation and development of inter-State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by law to be expedient in the public interest." Inthe words of the Planning Commission56: "The Central Government has not so far exercised this authority.. .. (and) ...inter-stateconflicts over water sharing have been the bane of water resources development in the country. Tribunals have been constituted in the past for Narmada, Godavari and Ieishna. Tribunals for Cauvery, Ravi-Beas and Ieishna (second Tribunal) are presently engaged in adjudication. Although time h t s have now been prescribed for Tribunals, s u l l the adjudication process i s a long drawn affairs. Tribunal decisions are interpreted differently by co-basin States and this again leads to disputes in operation of the Award." And in the words of the former Chair of the Central Water Commission57: `Various alternate doctrines based on, say the riparian principle, the chronology of use, the principle of causing no harm to the downstream entities, on the contribution of the State to the basin waters, as also those based on the principle of equitable distribution are available in the literature about international water law. These are cited during the process of negotiations or adjudication, with each party normally preferring the doctrine which serves its interest. Apart from the doctrines, there are many other common contentious issues, which are often discussed, but about each no agreed guidelines are available in India." This anarchic situation means that inmost cases there is no clarity about who can use what amount of water. And when there are awards they are incompletely specified and have no accompanying enforcement mechanisms. Unilateral actions are the norm, with the instructions of the Tribunals and even the Supreme Court routinely flouted. (As noted by Maria Saleth58 "as a point of contrast with these inter-state squabbles, one notes a high degree of respect and stabhty of water-sharing provisions ininternational water treaties".) The consequences are wide-rangmg and serious. There are major political consequences. There i s a highlevel of vitriol in the endemic clashes between states on inter-state water issues. In some cases inter-state water disputes have contributed to terrorist and secessionist movements59. Because anything can b e claimed in inter-state waters, politicians raise the specter of such "popular responses" when justifying non-compliance with water agreements. And the very basis of a federal state are put into question (as in the case of the 2004 unilateral abrogation by Punjab of all water-sharing agreements with other state@). And there are major economic consequences. The lack of clear, permanent allocations means that states often spend more time and resources over "securing our future rights" than they do to using what i s theirs. Three cases dustrate this general point. First is economic waste in an upstream state, as described by Nirmal Mohanty61 : "The problem of poorly established property rights in the tribunal awards ....has encouraged states to secure interstate claims to the headwaters of rivers by buildinglarge dams regardless of the financial and environmental consequences, and impact on downstream states. Maharashtra, for example, spent heavily on the Maharashtra IGishna Valley Corporation to create storage capacity to get prior appropriation rights to IGishna water; because if it did not do so, i t s share in IGishna awarded by the IGishna Water Dispute Tribunal would have been subject to revision. Interest and equity payments for these dams accounted for 17% of the state fiscal deficit in 2003/4." Second i s economic waste in downstream states. T h e Government of T a d N a d u does not make investments in improving water efficiency in the water-starved lower Cauvery Basin, because it perceives that any demonstration of greater efficiency would weaken its bargaining power vis a vis Karnataka during the next Cauvery Tribunal award. Thirdare the foregone opportunities for win-winprojects between states. Duringthe vigorous debate in 2004 on inter-basin transfers ("linhng rivers") a major obstacle to translating any sensible projects into practice was that of state water entitlements. A reported interaction between the Chair of the Task Force on L i n h gRivers and Laloo Prasad Yadav showed the only way in which "surplus states" would agree to share water with "deficit states". "Laloo warned that not a glass of water dbe allowed to b e diverted from the Ganga basin. A few days more, however, the de facto ruler of Bihar declared that water was like oil -if the right price was offered, h e may b e ready to sell''62 And finally there are major environmental consequences. Indianwater managers continue to perceive of any water not h e c t l y used for human purposes to b e "wastage". As described by the former Chair of the Central Water Commission63:"The need to balance the use of water with its deliberate non-use in order to maintain environmental balance of the riverine, estuarine, and the coastal ecosystems i s negated (in at least parts of the 2002 National Water Policy)". Given the lack of specification of states' water entitlements, this means that any water releases to estuaries, for example, would be the basis for other states to claim "wastage" and therefore an appeal to reduce the share of the offendmg state. T h e lack of Union Government action on inter-state waters has become a subject on which the government is widely ridculed, sometimes even by the government itself. T h e Union Secretary of Water Resources wonders64 how it i s that, 50 years after the passing of the River Boards Act, the Union Government has not once used that A c t to deal with inter-state river I development. The Chief Minister of T a m d N a d u describes the Cauvery River Authority65 as "a toothless wonder". Sunita Narain of the Centre for Science and the Environment sums the situation up as follows66: "In the political minefield of river dsputes, the government.. . just watches, waits for God to bring rain and temporary relief, or scurries about for a n e w appeasement package. W in all, it makes a farce of the issue staring it in the face: how the country i s to live and share its now-scarce water resources". Figure 36: Chief Ministers of Karnatako and Tamil Nadu resolving the conflict over the waters of the Cauvery River And, as always, cartoonists (Figure 36, Conflicts between upstream and downstream riparians in intra-state rivers: As scarcity becomes a fact so there i s growing confict between I existing and n e w users of water, even within single-state basins. T h e Vaigai Basin in T a d N a d u was a beneficiary of the century- old Periyar scheme, whereby part of the water of the western flowing Periyar River in Kerala was dverted by the revered Colonel Pennyquick over the Western Ghats to the Vaigai Basin inT a m d N a d u (Figure 37). Periyar water was used to establish major canal commands inthe lower Vaigai Basin. In the 1960s the Vaigai D a m was b d t to harness the natural flow of the Figure 37: Water entitlements in the Vaigai Basin Vaigai. I t was immedately apparent to those who had benefited from the Periyar water that this posed a threat to their water entitlements. Accordmgly and quite remarkably, the authorities at the Vaigai D a m keep two sets of a:.' 2A$\"" ~ ~ , ~ * ~ ~ sA5Y&sYvs~Aw5s ~ ~ ~ 25 books-one of which records the inflows and releases of Periyar water (which is of high reliability) and the other which records the inflows and releases of the much-less-reliable Vaigai River water. Over the years, however, there has been an ineluctable increase in the dams in the basin. Each of these has been built to provide water to a new command area. For example, the Sothuparai Reservoir in the headwaters was recently built (with World Bank fundmg) to the delight of farmers in the couple of thousand hectares served by the dam. But the waters of the Vaigai Basin were, if accounts were kept, already fully allocated. This was, in short, nothing more than a project (of considerable cost) which added little to overall water availabhty, but simply robbed downstream Peter to pay upstream Paul. While the basics of water balances apparently elude many of the State water engineers, they do not elude the downstream farmers. At a meeting of the incipient `"Vaigai River basin committee" in Madurai this was the main topic of conversation, with one downstream farmer (dubbed "the water lawyer of the basin") making a cogent (and widely-understood) presentation on water balances and creeping expropriation of water rights. In 1934 the Madras High Court, in the case of Setharama lingamv s Ananda PadayachiG7 "asserts that in case the lower riparian feels that there has been an actual decrease in the supply of water to him h e has a cause for action". Butbecause water accounts are not kept and there are no formal entitlements, the de facto law of water here (as elsewhere in Inda) is "what the State gives the State may take away (without informing YOU)". Conflicts between communities and the State: A major phenomenon of the last five years has been an explosion in community-based projects for "rainwater harvesting" schemes, which involve rehabilitating and buildmgsmall check dams and tanks, and household groundwater recharge structures, with over $150 d o n a year spent on such projects in recent years68 The initial impetus was from the Sukormajri project inPunjab, with a host of other celebrated and less celebrated community projects, and a substantial number of large scale state- sponsored projects (includmg the multi-state World Bank-financed Shivalik H d l s project and large State-financed projects in Andhra Pradesh and T a d Nadu). T h e performance of such projects varies widely. Objective evaluations show that performance i s mixed (with only 10 of 27 Hill Resource Management Societies functioning in Haryana69 , for example, and only 40% in Maharashtra70, and other evaluations showing only 25% or even 15% of such projects successfu171). Virtually by definition, these projects "take hold" only in areas where water i s already very scarce. And inall cases communities donly participate, reasonably, if they can use the water, primarily to irrigate their crops. This means that the rainwater harvesting schemes have two impacts -increased storage of water and increased use of water. Since there are already very low outflows from most of the highly-stressed basins, this means that the net addtional storage i s probably small. T h e result, in zero- sum cases, is that the new uses mean yet another set of addtional claims on h t e d water, claims which are honored only by reducing the availability for some anonymous downstream user. This has led to conficts between the State and the communities. Tarun Bharat Sangh is a rainwater harvesting NGO led by the charismatic Rajendra Singh. In one well-publicized incident, community activities led to the revival of a local stream, the water of which was then claimed by the State, which, under the I n d a n Easement Acts of 1882 has the sole right to collect, retain and dstribute surface water72. So not only does the State claim the right to take away that which i s has given, but it also exercises the right to take away that which it has not given (but owns anyway). Conflicts within irrigationprojects: Finally, there are an increasing number of serious dtsputes among farmers within canal commands. An important recent case i s that of the I n h a Gandhi Canal in Rajasthan73 (the major project for using the substantial quantity of waters allocated to Rajasthan under the Indus Water Treaty). T h e farmers in the first half of the project to be completed were allowed to share the water for the whole project, on a temporary basis, with this water to be gradually reduced to their design share as the other command areas were completed. But this fact was either communicated informally to the farmers or not communicated at all. They thus became accustomed to having plenty of water and planted water- intensive crops74. When the time came for them to reduce their water to the originally envisaged amount they perceived this as "confiscation" and revolted. Four farmers were killed in the summer of 2004. Once again the core issue was lack of clarity and certainty about entitlements. Vijay Vyas75 has summarized the situation well: "It dbe infinitely better to avoid conflict situations rather than seek mechanisms for confict resolution. Two preconditions for minimizingconflicts at the local level are: clear definition of usufructory rights, and dependable estimates of the water availabhty over time and over space. If the usufructory rights are clearly defined they can b e used as an explicit provision in formal or informal contracts among different water users and among water users and water providers. Ambiguityin proprietary rights i s at the root of several disputes." India has a large stock of hydraulic infrastructure: since 1960 the 1400 Union 1200 Government has VI g 1000 invested of the CI *. 800 order of $120 1 0 bdhon in water GO0 resources and 400 2$ irrigation76, with 200 the approved outlays for 0 irrigation alone in the Tenth Plan being $10 bdhon for irrigation and $1 bdhon Age for flood ~ 0 n t r 0 l 7 7 . Figure 39: The stock of major water infrastructure As described (large dams in this case) is aging earlier, the services provided by this Tyagi infrastructure are critical for economic growth. But the services are only forthcoming if this enormous asset - w h c h i s now aging, as dustrated in Figure 39 -- i s maintained and replaced. And the evidence i s palpable that this i s not happening. No State inIndia has a modernAsset Management Plan, and thus there are no reliable estimates of the cost of replacing and maintaining this infrastructure. Frominternational experience a typical figure - assuming regular maintenance - of replacement and maintenance i s about 3% of the value of the capital stock of water infrastructure78. This would imply that the cost of replacement and maintenance of Indta's stock of water resource and irrigation infrastructure would be about $4 bitlion a year, which i s about twice the annual capital budget in the Five Year Plan. It i s abundantly clear that not more than a tiny fraction of this i s actually been spent on asset maintenance and replacement. There are a series of dtstortions which are leadtng to the erosion of this asset base. T h e first dtstortion i s that the public agencies which provide these services are hugely over-staffed. Mumbai Municipal Water Corporation, for example, has about 35 workers per thousand connections, whereas well- functioning utllities have about 3 workers per thousand connections. And the UP Irrigation Department employs an astonishing 110,000 people. T h e politics of these public enterprises is such that salaries have the first call on revenues - in Haryana, for example, 83% of the allocation for irrigation operation and maintenance goes to paying salaries77. T h e second dtstortion i s that revenue collection is low and declining. Gross recoveries as a proportion of workmg expenses declined from 85% in 1975 to 42% in 198880and to 35% (for a sample of states) in19988l. T h e result of this pattern of declining revenues and rising personnel costs i s a pattern dustrated schematically in Figure 40. I In a - financially-well- = structured irrigation Interest system (such as that in Australia), users pay for Replace- efficient operations and maintenance and for the ~ replacement costs of the Efficient assets which provide O & M ~ their services. T h e government Pays (reluctantly!) the interest on debt accumulated in the past. T h e system a. Australia (see part (a) on Figure 40) i s clean and the incentives right (for the Figure 40: The financing o f water services in India users to demand efficient operations and maintenance (0and M), and replacement only of essential assets and that at least cost). T h e typical Indtan system i s m u c h more complex (see part (b) on Figure 40). First, there is an extra "block of payment" to b e made for the extra costs incurred by having large numbers of unnecessary workers. Second, the user payments represent only a small fraction of the total money avadable for 0 and M (includtng salaries). M o s t of the 0 and M allocations are from the budget (that is, paid for by all taxpayers), but these amounts typically do not cover what is required for 0 and M, leaving an unfilled "deficit" for 0 and M. At the top end the interest on past investments is paid for by taxpayers. What this means i s that there i s a yawning gap, paid for neither by users nor taxpayers. This means that 0 and M is not done adequately and - since it is last in the queue - there is no investment in replacing agmg assets. There i s no doubt that only a very tiny fraction of this required expenditure for rehabhtation i s actually being made. T h e end result i s the famdiar sight for virtually all water infrastructure in most parts of India - crumbling, rusting, leahng dams, canals and pipes. T h e situation i s serious even for infrastructure where f d u r e would be catastrophic, such as large dams. Where these are revenue- generating hydropower facilities the situation i s generally m u c h more satisfactory than for the irrigation dams which are totally at the mercy of budgetary financing. And it means that much of what masquerades as "investment" is, in fact, a belated attempt to rehabilitate the crumbling infrastructure, both for irrigation and for municipal water supplies. (Most World Bank "investments" in water infrastructuve are, in fact, not investment in new infrastructure, but an attempt to make some inroads into the huge liabhties from deferred maintenance, while simultaneously aiming at modernization of the infrastructure and developing institutional and financial practices which wdl help break out of this vicious cycle.) The contrast between globally-accepted goodmaintenance-and-replacement practice and that of the systems inIndia -- accurately described by N i r m a l MohantyE2as "Build-Neglect-Rebuild" -- i s represented schematically in Figure 40. Two examples dustrate how serious the situation has become. In the 1980s the Government of Tamil N a d u paid for the construction of a canal from the IGishna River in Andhra Pradesh to bring water to Chennai. Twenty years after construction, and as a result of the usual practice of deferred maintenance, the canal was invery bad shape. Since the State was unable to pay for rehabhtation, the rehabihtation had to b e "privatized" -- it was left to the religious `leader Sai Baba to pay for the rehabihtation of the canal. And in a recent national meeting on water the CEO of India's biggest pump manufacturer told of his bittersweet view of the burgeoning number of lift irrigation schemes. T h e State of Maharashtra had bought 34 large pump sets from h i s company. ``I was, of course, quite pleased by this for our business. But Ia m also a taxpayer, and when Iknow that just 2 of these 34 pumpsets are actually functioning it breaks my heart."*3 Again it i s instructive (Figure 41) to compare reasonable Annual non-personnel global practice with that in maintenanceand Indta. In the "good practice" case, the stock of infrastructure grows fast in "Stage 1" Good practice (referring back to the "Stages" dustrated in Figure 1) and then tails off in Stages 2 and 3. But as this stock grows, so the Stage 1 Stage 2 Stage 3 I financial demands for maintaining and replacing this investment stock increase. In the Indtan budget case - arguably in Stage 2 -the Indian stock i s s d growing, but the practice finance available for maintaining and replacing that Annual non-personnel stock has fallen rather than maint@nanc@and risen. replacement budget Figure 41: Depleting India`s infrastructure stock Incontext of social services, it has been estimated that no more than 15% of allocations actually end up beingdelivered to those for whom the funds were intended. m e the parallel is not precise, and numbers are not available, it i s clear that the infrastructure system i s similarly leadmg to hugely ineffective application of resources. M u c h of what is built i s not being maintained, and that which does s u l l function, delivers services of a low quality. This inturnreinforces the vicious cycle -users who are receiving such poor services reasonably refuse to pay, meaning that revenues decline sull further and the maintenance and replacement gaps widen stdl further. T h e end result i s that people supposedly being served by public irrigation and water supply services vote with their feet (or, more accurately, with their tubewells) so that they have alternative sources of supply. Later in the report we look at some ways of trying to approach the difficult but vital challenge of moving from a vicious to a virtuous cycle. There i s no silver bullet for this - will it need dramatic increases in the efficiency of the providers of the public services, it wdl require "transition plans" so that improved services can induce greater confidence in the services and d n g n e s s to pay for them, and it drequire recognition of a simple financial fact. In the words of Rakesh M o h a n "there are only two ways to pay for infrastructure - from taxes or fromuser charges. As long as I n d a i s not prepared to do either or both of these, there i s no hope for buildngand maintaining the infrastructure necessary for a more productive econorny.''84 In addtion to the major financial challenge of rehabilitating and maintaining its stock of water infrastructure, Indta also has to make major investments in addtional water infrastructure. T h e need for these new investments can be seen from several perspectives. Looking at I n d a in a global context, the country has remarkably small stocks of water infrastructure. As shown in Figure 42, the amount of water storage capacity in I n d a is very low for a semi-arid country - whereas the United States and Australia have capacity to store over 5,000 cubic meters for every citizen, China 2,500 cubic meters per capita and Morocco and South Africa 500 cubic meters per capita, Inda's storage capacity amounts to just 200 cubic meters per capita. cubic metersper capita 6000 5000 4000 3000 2000 1000 0 Figure 42: storage per capita In different semi-arid countries A dfferent perspective is the quantum of water that can be stored as a proportion of average river runoff. In the Colorado River Basin and inAustraha's Murray DarhngBasin this figure i s 900 days; in South Africa's Orange River Basin it is 350 days, but overall I n d a can store just 50 days of average runoff, with wide variations - from 220 days in the IGishna to just 2 days in the Brahmaputra/Barak basin (Figures 43). Figure 43: Days of average flow which reservoirs in semi-arid countries can store in different basins A complementary perspective is that of the degree to which India has u&ed i t s substantial hydropower resources. Again international comparisons are useful - Figure 44 shows that rich countries have developed about 80% of their economically-viable hydroelectric potential. In&a has substantial economically-viable hydropower potential, but has developed only about 25% of this potential. 90% 80% f 70% 60% a 50% u 40% 2 30% ' 1 , L 20% Africa n 10% 0% 0 400 800 1200 1600 ThousandGWHlyr economicallyfeasiblepotential Figure 44: The development of economicallyfeasible hydropower potentials in India in international context Most of Inda's hydropower potential is in the Himalayas (Figure 45), an area which has many of the world's most environmentally and socially benign sites for hydropower (Figure 46). Figure 45: Status of Hydropower Development in Different Regions Source Ministryof Power. 1998 8 1 " P, i o 10 100 1000 Area submerged per mw (log scale) igure 46: Environmentaland social indicatorsfor hydropowerdams Figure 47 shows how the level of hydropower has fallen relative to other sources. (Over the past 6 years, installed hydropower capacity has increased by about 8,500 mw, raising the '/o of hydro to 26% in 2005.). Over the past decade it has become clear that the availabhty of electricity is emerging as a serious constraint to Indtan economic growth. Given the particular importance of peaking power (a unit of which is estimated to be worth about four times the value of a unit of base load85) In&a has appropriately embarked on an accelerated hydropower development program. Figure 47: The declining role of hydropower in India National Commission on Water T h e accelerated hydropower program has brought to the fore two serious water resource challenges, which have yet to be effectively addressed. M a n y of the world's most successful river basin development programs - ranging from the legendary Tennessee Valley Authority of the 1930~86to the present-day Yangtze Basin development project 87- have relied on hydropower to generate the resources necessary to fund "public goods", such as navigation and flood control. (The Three Gorges Dam, for example, i s operated as a flood control dam, at an opportunity cost of a massive $1.5 blUlon a year in foregone power revenues.) While there i s a history of successful multipurpose projects in India (including the Bhakra D a m cbscussed earlier), the Government of Indta now does not have an enabling framework which fachtates the same socially-optimal outcomes. In the Brahmaputra Basin, for example, there are large benefits from multi-purpose storage projects that are being foregone88 because power companies are licensed to develop "power-only" projects, which are typically run-of- the river projects with few flood control or navigation benefits. This cbfficulty i s exacerbated by the fact that "host states" get very large royalties (12% of gross power sales) from hydropower sales. T h e situation i s best dustrated by considering the situation with projects in Arunachal Pradesh. T h e Government of Arunachal Pradesh gives no weight to flood control and navigation benefits (which would benefit the much larger populations in downstream Assam) and gives high weight to any submergence (which would displace people in Arunachal). The Union Government has not found a formula for getting goodmulti-purpose outcomes from such development opportunities. As described earlier, while overall levels of reservoir capacity in Incba are low in international terms, there i s wide variation. Figures 48a and 48b show, for each Indian basin, the annual flows and the number of days of flow that can b e stored in reservoirs. A WFR Figure 48a: flows in billions o f cubic meters per year in the major rivers basins of India -4- Figure 48b: The number o f days o f average flow that can be stored in GIS pr~sanlialimbir WMl different river basins in India GIS presenlelbmby IWMI Noting that there are sharply dirmnishing additional yield from a unit of storage once there is substantial reservoir capacity89, these figures suggest: That there i s little value to additional storage in most of the peninsular river basins, (the Cauvery, IGishna and Godavari) and in the Narmada and Tapi. There are likely to be a number of attractive possibhties for storingwater in some of the "low storage basins" (including especially the Brahmaputra, Ganga, Brahmani and Subanerekha as well as the west-flowing rivers south of the Tapi and, to a lesser degree, the Mahanadi and Godavari) T h e idea of "linhng rivers" has surfaced several times in Inla's history. In 1984 the National Water Development Authority was set up to identify appropriate inter-basin transfers and to undertake feasibllity studies for these. Figure 49 shows the links being considered by the NWDA. T h e idea of these inter-basin transfers has provoked much discussion and controversy in India. On the one hand the idea seems obvious to most lay people who observe annual cycles of simultaneous drought in some parts of the country and floods in others. On the other hand there are many legitimate (and some less legitimate) causes for concern. T h e legitimate concerns are that each "link" needs to evaluated not just from an engineering perspective but from economic, financial, environmental, social and political perspectives. T h e politics are important Figure 49: both domestically and internationally. Domestically, Possible inter-basin water transfers because such links could only materialize if there are willing "givers" -who wouldneed to be compensated -- as well as "takers" -who would need to compensate. And internationally because such inter-basin transfers would affect neighboring countries, who would necessarily have to be consulted and have their concerns taken into account. T h e less legitimate concerns are those which consider any inter-basin transfers to be "un-natural" and even "causing mutation in the DNA of rivers"! In fact many arid countries have invested inmajor inter-basin transfers. In South Africa, for example, seven of the nine provinces get more than 50% of their water from interbasin transfersgo. And India itself has benefited from a substantial number of beneficial inter-basin transfers (some old, like the Periyar project and some more recent such as the Bhakra-Beas system). The LinkingRivers Task Force headed by Suresh Prabhu, MP, functioned in a refreshingly dfferent manner from the normal, "behind-closed-doors'' approach taken to water issues in India. There were dozens of public hearings and m u c h public debate. Unfortunately the quality of this debate was compromised because, despite numerous assurances to the contrary, the NWDA has never made public (withone recent exception) the feasibhty studies which it says exist. There remains very substantial "unfinished business" in the provision of irrigation and water and sanitation services, too. Notingthat there were a large number of irrigation projects which had been started and not completed (some for fifty years!), and that there were other situations where headworks were constructed but command area development was incomplete, the Union Government wisely gave and gves high priority to completion of that which has already been started. T h e Accelerated Irrigation Benefits Program i s designed to complete projects which would eventually serve 10 d o n hectares, with about 2 d o n hectares completed to date. I t d take about $10 bLUion to complete this programgl. S d a r l y the Command Area Development and Water Management Program is designed to complete distributionservices inanother 10d o nhectares. While the returns to n e w irrigation investments are declining (Figure 50), it i s clear that government w d s d need to make very substantial investments in new irrigation in coming decades. The India Water Vision of 200092 estimated that government would need to invest about Rs 80 bLUion a year for irrigation every year for the next twenty years. How much the YOwho are poor is reduced when there is a 1% increase in the proportion of cropped area which is irrigated 0 6- - . -.. 3 5 3 4 33 0 2 0 1 0 1973-74 1977-78 1983 1987-88 1993-94 1999-00 , Figure 50: The poverty reducing impact of irrigation is declining.... Source Analysis o f 14 states by Dr. RPS Malik, 2005 As shown in Figure 51, the proportion of plan expendtures allocated to these sectors has been falling over tune, with the Ninth Plan allocations to irrigation and flood control being about Rs 80 blUton a year93 . The Tenth Plan, however, represents a large increase, mth annual allocaaons averaging about Rs 170 biUion a year". Inaddinon to these allocations, the water-related sectors absorb substantial sums of hidden subsides (Figure 52). 25 70 of 20 totol Plan outlays 15 10 5 0 Figure 51: Allocations to major water Infrastructure are declining Figure 52: Subsidies to water related sectors Mnrrin 71lfl.5 On the water supply and sanitation side, official figures show coverage with water supply to be 94% in rural areas and 90% in urban areas, and sanitation 24% in rural and 62% in urban areas. These numbers are probably a better indication of the infrastructure that has been built than the services that are actually provided95 - there are large numbers who do not have adequate services. T h e large subsidies, justified in the name of the poor, in fact benefit those who get water (who are those who can exert influence on rationed supplies, and are therefore not the poor) and those who use a lot of water (the middle class and rich). T h e primary immediate challenges for the water and sanitation sector are to extend services to the unserved, to improve the quality of services to those who are nominally served, and to do this though uultties which are efficient and accountable. M o s t of the revenues for these services are going to have to come from users, because (as discussed later) the urban authorities are going to have to invest massive amounts of public money in the sewerage systems needed to clean up the pollutedrivers. T h e India Water Vision has estimated that it will require about $1.6 bfion a year for the next twenty five years if all are to provided with water supply services, and about $0.8 b&on a year for household sanitation. Finally, it i s obvious that there are huge financial needs for addressing the water environment. There i s no systemic study of what the aggregate "needs" are, or what the priorities are. And there are only very patchy data - the report of the National Commission on Integrated Water Resources Management, for example, does not give a single piece of hard data on water quality. T h e magnitude of the organizational and financial challenge for d e a h g with the major issue of river pollution is dustrated in a b r f i a n t recent study by the Centre for Science and the Environment96 of the Yamuna Action Plan (See Box 1). T h e Yamuna case shows the dismal and deteriorating state of one of Indla's major and most sacred rivers. It also shows the scale of the organizational, planning and financial effort required to even make a dent in the problem, and suggests both the importance and hutations of a litigation-based approach to dealing with these issues. It does show that there is a rising awareness about the importance of environmental issues, and a growing wihngness to use financial and other tools to address these. Insummary, the water sector inIndia faces a massive financial challenge. The annual requirements for rehabllitating the existing infrastructure probably amounts to Rs 200 bdtton. T h e India Water Vision projects needs for n e w investments - with very modest allowances for sewage treatment -- of about Rs 180 bfion a year". Annual allocations in the recent past have varied between Rs 90 and Rs 170 bdtton a year's. At the same time there are heavy (and reasonable) demands for public investments in other infrastructure. I t i s estimated, for example, that the investments needed in roads, ports, railways, airports and telecoms for the next decade will average Rs 2000 bfion a year, and that government will b e about to finance, at most, about two-thirds of thisgg. Box 1: Water environment challenges -the case of the Yamuna River around Delhi There are several bits o f "good news". First that India has such competence in the environmental watchdog sector that produces first-rate analyses, such as t h s piece on the Yamuna, and gets it into the public domain and to the attention o f politicians, the courts and the government. Second, that over the past 15 years the Supreme Court has played an active role inpushingfor greater attention to environmental issues, not least on the Yamuna. Third, that in some instances at least - and the Yamuna Action Plan is one of these - the government, with support o f donors (the Government o fJapan, in this case), are investing heady in environmental improvement projects, with about Rs 1500 crores invested in the Yamuna Action Plan (about Rs 600 crores o f which were invested inDelhi). There is, however, "bad news", too, and lots o f it. First i s the fact that this important start has barely scratched the surface o f what i s needed. Repairing the plumbing that feeds into sewage treatment plants i s a huge and very difficult task. A large portion o f the 5600 kdometers o f sewers are silted or settled, with only an estimated 15% o f the 130 kilometers o f trunk sewers in order. And the seventeen sewage treatment plants have a capacity to treat only about half o f the sewage produced, whlch in turn covers only about 60% o f the population o f D e h . Second are the problems o f operation - only about 60% o f the capacity o f the existing treatment plants i s actually used. The end result i s that less than 20% o f the pollution load into the river i s actually treated. Since the BOD load on the river has more than doubled in the last ten years, it is n o surprise that condtions inthe 22 kilometer stretch o f the Yamuna around D e l h ihave gone from terrible to appalling. As shown inFigures 53 and 54, the river i s dead (there is no dissolved oxygen in the water) and there are more than 10 d o n fecal coliforms per 100 ml, a level over 10,000 times what i s considered a threshold for "bathable water". Third, there are pestions about the implementability o f the rulings of the Supreme Court. In 1985 the court ordered the :onstruction of Common Effluent Treatment Plants to treat 190 mld o f industrial sewage; twenty years later only j3 mldcan b e treated. In 2001 the Supreme Court ordered the government to ensure a level of dissolved oxygen ,f 4 parts per d o n within two years; today the level of dissolved oxygen i s zero. In 1992 the Supreme Court ieard a plea to ensure that all of the waters o f the Yamuna could not be chverted before it reached Delhi - the minimumflow case' "is still on". The lessons are that judicial activism can not and should not be a substitute .or effective government action. - Figure 53: Yamuna river dissolved oxygen .- Source:CSE 2005 I I Figure 54: Yamuna river quality - faecal coliforms Source: CSF 2005 As described indetail in Section 2, Indta faces a daunting set of water-related challenges. There is sttll m u c h n e w infrastructure to be built, but by far the most important and serious challenges are those of management - of existing infrastructure and of the water resources itself. And here there is a major problem - governments at both the Union and State levels remain focused, in the words of the Planning Commission "on the problems of the past", and (with a few notable and partial exceptions) are yet to even initiate a dtscussion of the changes which are necessary to confront the urgent and major n e w challenges of water management in In&a As the problems with the current system become more clear and serious, numerous high-level commissions have been appointed over the past fifteen years - among others to examine Union responsibdities on inter-state riversio0, pricing101 and dealing with integrated water management102 -- and n e w national and state policies have been promulgated . Inmany cases the recommendations are sensible, but in most cases the commissions come and go, the policies are promulgated, and the machine grinds on unchanged. In the words of a major Government of Indta/World Bank review in 1998: "in recent years there has been realization and policy pronouncements regarding the need to address these problems; however the policies have not been translated into action." Some experienced commentators have argued that reform of government m a c h e r y for managing water in Indta i s a hopeless case. Tushaar Shahlo3 suggests that, "in designing water governance strategies for India, i s seems sensible (in the intermedtate run) to take the `nature of the state' as given.. rather than assume . that the nature of the state dchange to resolve water sector problems". This dtsconnect between problem/pronouncement and practice has led to widespread loss of legitimacy and credtbhty of the state apparatus for water development and management. This is evident most obviously in the fact that most citizens have come to rely on informal mechanisms for getting the water they need to grow their crops and for their household needs. It i s patent in every encounter between the state and citizens on water matters, and it i s expressed acerbically every day in the press - "(government) makes a farce of the issue staring it in the face: how the country i s to live and share its now-scarce water resources" 104 - and in the numerous water-related cartoons. To an observer who has interacted with In&a over the last thirty years, the greatest and most promisingchange has been that the standard response to any dtscussion of reforms has changed from "well that cannot work here, because I d a i s such a special case" to "why not"? Regrettably m u c h of the water bureaucracy of Indta sttll lives in the "not here" rather than the "why not?"world. To a large degree this crisis of the water state is a reflection of the general set of challenges facing government in a rapidly evolving Indta. A recent book, ``Governance'', by a prominent minister in the last UnionGovernment states the general case: "The malaise affects all the institutions of State ....The malaise i s well known to those in the system, too. Proposals for reforming that system are adopted from time to time and decrees go out to implement the measures `in a time-bound manner'. But in every case the proposal is put through the same d... ground to dust..... Mere announcements amounted to ref0rm.... and (many) spelled a major advance.. . but now actual governance has to be changed.. and the way to . reform the system i s not to tinker with this procedure or that institution, but to jettison the function, to hack away the h b whenever this i s possible. ...Continue to transfer functions and power from the State structure to society. A leaner machine, like a leaner body, dthen be easier to improve. For we need to improve the State (because) there are several tasks that only the State can di~charge"~05 Water management i s one of these "several tasks which only the State can discharge". Section 2 of this report describes a wide range of tasks which (a) the State currently undertakes and performs poorly (maintain stocks of infrastructure and ensure that they provide good services in a .financially sustainable way) and (b) only the State can perform, but about which it does little (including: clarifying who has an entitlement to use water at all levels, from the inter-state to the canal distributary; regulating groundwater; providingpublic goods includmg flood protection and sewerage treatment). Section 2 also describes the coping mechanisms which farmers, households and industry have developed to "work around" a poorly functioning public water sector, and how these "exit options" are becoming less and less feasible as resources - and especially groundwater, which has been the "safety valve" - become scarce. I f it were easy to change the way inwhich the State performs, this would have been done some time ago. There i s ample evidence that changes in organizational arrangements within the existing system of incentives is a h n to shuffingthe deck chairs on the Titanic, and dmake no difference. For this reason this report will not examine propositions such as the much-discussed one of "creating a single Union Ministry which d deal with all water issues", because such a change would make little fundamental difference in the way inwhich the state operates. T h e only way in which change dtake place i s if reform-minded political leaders shift the balance of power between the state machinery, on the one hand, and users - farmers, citizens, industries -- on the other. T h e state needs to surrender those tasks which it does not need to perform to others, and the state needs to develop the capacity to do the many things which only the state can do. Figure 55 gives a schematic representation of how the Indian water sector looks `how" and a vision of how, on the basis of what works inwell-performing water sectors in other countries, it might look "then", after the needed changes. T h e main features of the changes are: 1. that the public sector dcontinue to have an important role inprovidingirrigation and water supply services, but 2. this dnow be in competition with a large and vibrant non-governmental sector - including the private sector, NGOs and cooperatives - for provision of formal irrigation and water supply services. 3. as service provided by this mixed service sector improves, large numbers of people dmove from the informal, self-providing, water economy into the formal service sector; 4. the public sector dplay an expanded role in the financing and provision of public services (such as flood control and sewage treatment); 5, the government will develop a set of laws, policies, capacities and organizations for defining and delivering an e n a b h g environment, with special emphasis on the establishment and management of water entitlements, and the regulation of services and resources.). Keeping this desired evolution in mind, and building on the analysis presented in Section 2, thls section describes some of the critical changes which can get this reform started, describes some of the areas in which progress i s being made in India, shows what changes other countries faced with s d a r challenges have made and how they have managed the process, and offers some "rules for reformers" who are part of this change process. (c) Instruments,not organizationalforms, are key Discussions about "water strategy" in India are typically dominated by "we need to spend more on flood control, or on rehabilitating tanks, or hking rivers, or on rainwater harvesting or on desalination", with the answers usually depending on the regonal experience of the minister or bureaucrat who i s leading the discussion. Insome instances these are supplemented by extensive sets of recommendations of a very specific nature -what crops should be grownwhere, how tariffs should be manipulated to achieve a host of objectives. T h e nature of these discussions reflects, in the words on the former Chair of the Central Water Commission, a view of water that is embedded in the command-and-control view of the economy106. T h e dialogue within the water sector, with some important exceptions, has not adjusted to either the broad liberalizing economic changes initiated in the Indian economy in 1991, and has not internalized the lessons from water management reforms throughout the world. These lscussions have seldom involved an assessment of the incentives which g v e rise to present performance and what must be done to change those incentives (and thus behavior). T h e Member of the Planning Commission who i s responsible for water and power has said it well: ". ..it is the absence of sound incentives which is the fundamental problem facing water management in India"107. What would such an incentive-based approach to water reforminIndiainvolve? Most fundamentally it would involve, as suggested inFigure 55 a major change inthe role of the state . T h e government would allow others (including the private sector) to compete for the right to supply water supply and irrigation services, while the government would turn i t s attention to the financing (and in some cases the delivery) of flood control, sewage treatment and other public goods and would have as its central task the development and implementation of an integrated package of instruments -entitlements, pricing, regulation--whichwouldstructuretherelationshipsamongwateruserssothat water i s used efficiently, and environmental and financial sustainabhty i s assured. M a n y dtscussions of water reform in Indta (and elsewhere) focus on organizational issues - the perennial favourites being Participatory Irrigation Management (l`IM)and a single Ministry covering all water (for water resource management). The perspective of this Report i s that the primary emphasis for institutional reform should be, in the words of Nobel Laureate Douglass Northl@s the rules of "on the game" that shape behaviour. That is, the primary focus should be on instruments, rather than organizational forms. (Organizations do, of course, matter. For example all well-functioning water systems separate the providers of services from the overall water resources management authority. But this is something that is much more about the instruments that govern the relationships between regulator and user than it is about new names and separation of cadres, the issues which too often occupy center-stage in discussions of Indtan water reforms.) Accordingly, this section describes each of the central instruments that would form part of an institutional package of reforms, stressing continuously that this i s an integrated package in which the whole i s more than the sum of the parts. Consider, for example, the issue of irrigation services. Inhis excellent book on the political economy of water inPeninsular Inda, David Mosse1@9describes the necessary set of interlochngchanges well: "Since irrigation involves wider hydraulic systems which are beyond the control of WUAs and which inevitably render them dependent upon the state, farmers organizations have little chance of surviving as independent self-managed social organizations. T h e next step therefore does not lie in knowing how to organize farmers organizations.. but how to overhaul the adrmnistrative system so that the . state irrigation departments and farmers can be boundinto productive relations. PIM cannot become a reality nor can it become self-sustaining without the restructuring of state irrigation departments.. . What i s striktng in Indta's IMT/PIM programs i s how little attention i s given to water rights. T h e government's rights to water are unchallenged, while i t s obligations to deliver water to WUAs i s rarely legally bindtng ..." In short, as illustrated in Figure 56, a sound irrigation service model requires mutually-reinforcing changes in all three "legs of the stool". I k Figure 56: The basis for sound irrigation service provision (d) Stimulatingcompetitionin andfor the market of water supply services As described in Section 2, the provision of formal irrigation and water supply services in India is the virtual exclusive monopoly of government agencies, which do not provide services to many - especially the poor - and provide poor quality services to those who do have access. As Tushaar Shah110 has noted, the large-scale self-provision of irrigation and water supply services that i s the most damning testimony to the failure of the government-dominated formal service provider model. There are a couple of exceptions -TISCOinJamshedpurl]', for many years, and recently the textde town of Tirapur in T a d N a d u -- are where industry has such a dominant presence in a particular town, that industry has simply taken over responsibhty for providingwater supply services to households. In these cases service quality has improved substantially. But they have largely been seen as anomalies rather than models on w h c h to build. T h e situation in India remains one in which public monopolies face no competition either "in the market" , or (`for the market" (where head-to-head competition i s not possible). T h e one over-ridmg lesson from the global revolution in the provision of public services i s that competition matters. In some cases competition "in the market" is possible. For example, it is technically quite conceivable, in the large irrigation systems, to unbundle the bulk and dstribution functions and then have a variety of forms - cooperatives, the private sector -- for providing distribution services to farmers. As has happened elsewhere (inthe airlines and telecoms sectors in India, for example, and in a plethora of public services around the world) such changes would unleash a chain of healthy systemic changes which would transform the business of the provision of public services. First, it would require a clear contract between the bulk provider (the Irrigation Department) and the non-governmental provide which would define the rights and responsibhties (for water and for payments) of both parties. (Such a contract between the D e l h iJal Board and the private operator of the Sonia Vihar water treatment plant in Delhi, shows this process at work. D e l h Jal Board i s responsible for ensuring the bulk water supply for the plant, and pays a fme of Rs 50,000 a day if the bulk supply i s not provided. This has led to the DJB making unusually energetic efforts to ensure provision of bulk water supply for the plant112 and, coincidentally for the people to be served. That said, these efforts remain fraught with the usual problems arising from lack of clarity about water entitlements - one day the Government of Uttar Pradesh says it i s committed to supplying water to Delhi, the next day the situation has changed"?, with the fate of water supply to one of the world's largest sities depending on short-term political haggling.) Second, it would require a clear contract between provider and those who receive services (probably Water Users' Associations in most irrigation cases). T h e absence of such contracts i s one of the major reasons why the monopoly- providers remain unaccountable to users, and information remains so poor and opaque. As always, discretion and lack of accountabhty i s the handmaiden to corruption. (In IUltgaard's"4 famous equation "corruption = monopoly + discretion - accountabiLtty" .) T h e Vaidyanathan Commission on the Pricing of Irrigation Waterlls put this clearly in the Indian context: "the discretionary powers of the bureaucracy.. provided by the existing system are powerful reasons for the functionaries to . oppose any change which reduces their power and enhances the role of user in decision-makmg". Thirdit would require that costs are `(revealed", and the distinction between legitimate costs and those -such as massive over-staffing -which shouldnotbe passed on to users. Fourth, the entry of private and other non-governmental providers would naturally lead to comparisons between the costs and quality of services provided by different providers, and thus pressures - for the f x s t time -on public providers to improve their performance. (This latter factor has, arguably, been the single biggest advantage of the introduction of the private sector in other countries. In the US, for example, public water udtties have improved, in large part, as described in a study by the U S National Academy of Sciencesllh, "because if public uthties did not improve they would be taken over by the private sector".) Untilquite recently it was assumed that the private sector could play a role inthe provisionof formal water services in cities and towns, but that this would never happen in Irrigation. Indeed, the m i x of public and private financing for the provision of services does vary widely for dtfferent types of infrastructure (Figure 57). ai Power generation But recent developments have shown that while most canal irrigation services will remain in public hands for the foreseeable future, the private sector can play the same stimulating, competitive role that it plays in water supply. Pakistan i s considering experimenting with "professional management" contracts whereby a canal command would be given under management contract for a private sector operator would operate under license to provide farmers' organizations with their water entitlements. Inother countries -Chile and Morocco - for example, the authorities have gone further and given out "reverse concessions" whereby private operators operate public irrigation systems, with the "winning operator" being the one that requires the smallest subsidy to provide the services. (There are many advantages to such delegation to the private sector, and it i s an approach which has worked well in other sectors - such as highways - in Indta, as described by N i r m a l Mohanty117 and Sebastian Morris118. These and other "special purpose vehicles" were being explored as part of the work of the now-dtsbanded Task Force on LinhngRivers. Important as such innovation are, it i s important to realize that they do not create something out of nothingand that the basic financial arithmetic remains that revenues s d have to come from either users or taxpayers.) S d a r l y in the historically-public business of wastewater treatment, there i s m u c h innovation taktng place. In relatively advanced developing countries, typically less than 25% of sewage treatment plants actually functionllq. Three years ago the Federal Government in Brazil took an innovative approach to this problem. I t set up a fund, called "Compra de Esgoto" (or "buying treated sewage") whereby municipalities are paid for the production of treated sewage, not for the construction of treatment plants. T h e program i s worktngwell, and producing m u c h better outputs than the tradttional "pay for inputs" approach. Sebastian MorrislZ0 has described in detail some of these possibhties, their advantages, and Nirmal Mohanty121 describes how such arrangements have performed well where they have been tried in Indta (for example with annuity contracts in the National Highways Development Program). And Vijay Vyas122 notes that the model of having " bulk water provided to private parties who can retad it to actual users has worked well with cooperative institutions". As described by Sekhar123,in recent years there has been a lot of discussion about "benchmarhng" in irrigation services, worldwide and in India. T h e International Commission on Irrigation and Drainage and others have developed a useful set of practical tools for "benchmarhng" of irrigation services124, and the Asian Development Bank has produced similarly important material for comparing the performance of water utihties across Asia125. T h e common reaction to these materials has been for the public uulities to see these as technical inputs to be considered by the engineers of the agencies when consideringifand how they might change their modus operandi. This misses the central value of such tools, which is to expose monopolies to forms of "comparative competition", and in which public discussion and transparency are as important as the technical information. In some cases technical benchmarkmg information has been supplemented by "acco~ntabhty" scorecards in which users are h e c t l y asked their perception of critical service issues. These have been done by the Public Accountabhty Center in Bangalore126. T h e Irrigation Department which participated in this experiment saw this initiative as a threat and refused to cooperate in dissemination of the information or in extension of the idea. T h e stimulation of "competition in the irrigation distribution market" i s of high priority. It d require a lot of technical assistance from professionals from countries who have done h s (with Australia being a "best practice" case.) Important question include: How does one ensure a level playing field? How might workers in the Irrigation Departments b e encouraged, as was done in Mexico City`27, to form their own irrigation services companies, thus ensuring that their expertise i s put to work, that resistance to the change is reduced, and even that h s helps retrench a heavily over- staffed state? How should auditing of performance and flows of water and money be done so that audits are trusted by all? How does one write enforceable contracts "up" - between the service provider and the government, and "down" between the service department and the users? Nothing like this has been done in India, but some states which are working with the World Bank - including Maharashtra and UP - are now considering such experiments. It is essential that these efforts be given highpriorityand supportedwith the necessary technical assistance and capacity buildingsupport. Section 2 argued that the absence of clear, enforceable water entitlements at all levels i s at the root of many of the service shortcomings, water use inefficiency, corruption, financial problems and conflicts which plague the water sector in India Ina definitive legalreviewofwater rightsinIndia, Chattrapati Singh128provides an elegant overview of the history and politics of water rights in India. Singh notes that "the fact that right over water has existed in all ancient laws, including our own dharasastras and the Islamic laws...". H e notes that "the pre-capitalist customary conceptions of group rights have competed with a parallel set of post- capitalist individual rights" and that the various 19th century irrigation and canal acts "implicitly recognize individual rights in granting that the government dgrant compensation for damage done inrespect of any rightto water". InIndia there are excellent cases of clear entitlements at the international level (the Indus and Ganga Treaties). In India, as in all parts of the world where water is scarce, informal water markets have arisen, inwhich those who have (implicit) rights sell water to those who need it. Movingtowards a formal water entitlement system first requires clarifying that water is publicly owned and that a water entitlement i s usufructory- it is a right to use, not a right to own w a t e P . As stated by Chattrapati Singh: "the only kind of rights that can become operative for anyone are usufructory rights, that is right to use water. The real question is who has what kindof right to use water, andwhat corresponding duties attach to it." In all cases, includingin India, the ownership of water resides, and must continue to reside, with the state. T h e essence of the change to a formal system i s that water entitlements (of individuals and communities, including traditional users) are separated from land rights (although land rights, along with traditional rights of nodandholders13U would logically be the major factor in assignment of the original rightsl-il),and then enjoy the same legal certainty as land and other property rights. Experience throughout the world n2has shown that, after lengthy debates about entrenching existing privileges, the only politically-feasible solution to the establishment of initial entitlements is to recognize de facto existing rights, making adjustments where the sum of existing uses exceeds sustainable use (which i s the case in many aquifers). A s described by hlaria Saleth133 the usual mechanism i s for users to apply, within a specified period, for a formal entitlement or license, based on proof of their water use over the preceding five years. Licenses are generally waived for small abstractions for meeting hnmedmte domestic uses. Once established, such entitlements give rise to a series of fundamental and healthy changes. First, those requiring additional water (such as high-value agriculture and people living in growing cities) will frequently be able to meet their needs by acquiring the entitlements of those who are using water for low-value purposes. ( A s described in Box 2, there is an important recent example of such 'ctrade~"in Indm In2003 70% of allwater used by the city of Chennai was leased fromwells of nearby farmers.) Second, there are strong incentives for low-value water users to voluntarily "forebear" from use, making reallocation both politically attractive and practical. For example in the pioneering watershed management project in Sukormajri initial entitlements were distributed to all in the village, giving people a valued new asset. M a n y of the poor later chose to cash in their entitlements by selling them to landowners who could put the water to better use. Box 2: IncipientWater TradingaroundChennai The city o f Chennai suffers from chronic and severe water shortages. In the past it has meant that major industries (fertilizer and chemical factories) have closed for months because o f water shortages. And it has meant, and means, that people in this city have learned to live with small amounts o f water for a few hours a day. The standard coping strategy - sinking household tubewells - became ineffective as water tables dropped and as salt water from the sea intiuded into the aquifer under the city. There were a number o f different proposals for augmenting the meager supplies o f water to the city (in addition to strenuous efforts to repair leaks and more generally improve the quality of the udty - Metrowater -- and its infrastructure). In1996 Metrowater and the World Bank did an assessment o f the feasible alternatives for supplying additional bulk water to the city. The major sources being considered by the city were the T'eeranum Tank (which required construction o f a 250 kilometer pipeline) and desalination, both o f which were very expensive, especially relative to the domestic tariff o f Rs 2 per cubic meter. But what was strikingwas that, while the city suffered from water shortages, there were large areas growing paddy just north of the city, using water from the AK aquifer. A detailed prior hydrogeological study indicated that the sustainable yield o f the aquifer was very large, and back-of-the-envelope calculations showed that the water would cost the city just a small fraction o f the cost o f water from any other sources, as shown inFigure 58. "This is all well and good" explahed the Metrowater officials, but "that water is used by farmers, who are a strong lobby and who will not permit u s to take their water" (showing, incidentally that the ubiquitous Indian policy o f "priority for drinkingwater then agriculture was impossible to implement inpractice. "But what if you bought the water from the farmers", they were asked. "So, our farmers are very wedded to growing paddy, they would not be interested in giving up their water.. . " The seed o f this idea WAS, nevertheless, planted, and in 2003 70% o f the raw water for the city came from buying water from farmers in the AK aquifer! "Did the farmers react unfavorably as you thought?"Metrowater was asked. "The farmers are not happy" was the reply. "W%y?" "Because all the fiarmers want to sell their water, and we cannot buy from all of them!" was the reply. There i s bothgood news and bad news in this story. The good news i s that the experience unequivocally showed that farmers were quite WiUing to accept "forbearance payments" to desist from irrigated crops, when they got more money that way than from planting water-guzzling crops like paddy. And in this i s one o f the very rare cases where a ban on additional wells i s actually enforced. However there i s a darker side to the story, too. Eight years ago Metrowater had funding for a major study which would look both at the hydrogeology @ow much water could the aquifer yield on a sustainable basis?) and at institutions (how to set up formal water entitlements which would add up to the sustainable yield and which could be leased or sold to the city?). As is standard for Indian water institutions, Metrowater showed little interest in the second, which has not yet been done. In fact they did worse - they pumped far more from the wells than could be sustained over time, and did nothmg to put inplacearrangements to safeguard the aquifer. 55 50 40 35 cost o f 30 water, 25 Rs per cubic 20 meter 15 10 5 I 0 0 1000 2000 mld 0 100 ZOO 300 400 500 600 700 800 900 1000 MCMIyear Quantity o f Raw water Figure 58: Cost and quantity of raw water from different sources for Chennai Third, the establishment of formal water entitlements gives rise to strong pressures for improving the data required to manage the resource. And fourth, this reduces the pressures of a "race to the bottom," since those who have entitlements have a powerful interest in sustainabhty of the resource base. T h i s is not to suggest that there is unanimity on the concept of water entitlements, for some see this as a n unhealthy commodification of a public good. Nor is it meant to imply that it i s simple to introduce entitlements-based systems for a fugtive resource with deep cultural implications in a h n i s t r a t i v e l y weak environments a n d in ones in w h i c h there are millions of small users. Nonetheless, the last 10 years has seen enormous progress globally in the use of formal water entitlements - with well- functioning systems now working in Australia, Chile, Mexico, Argentina and South Africa.. (Box 3, fromAustralia, provides a particularly clear description of the central but quite different roles of water entitlements a n d pricing in Sustainable water management) I t is noteworthy that all such established systems are worhng, often after initial adjustments, a n d are performing well. In n o n e of the countries that have adopted such systems is there any thought to returning to the previous government-managed allocation procedures. BOX3: Water entitlements are the principalmechanism for ensuring efficiency, sustainability and voluntary reallocation of water Unpublished, Letter to the Editor, The Economist, July 2003: Your special survey on water ("Priceless", July 19) embodes inits title a prejudice that experience from the real world rarely justifies. You refer specifically to the experience o f the Murray-Darling &GD) basin. Inthe M-D,water use is constrained to equal the sustainable supply through a complex system of water rights, defined in terms of volumes and security of supply. In this drought year - the worst for more than a century - many users are receiving less than 16% of their "normal" entitlement, and that restriction i s enforced entirely through the water rights system - not through pricing mechanisms. Formally codifying these property rights - in systems that were already well managed and orderly; where customers were educated and accustomed to following rules; and allocation rules were already broadly in place and enforced - took a number of decades. Once this process was complete, it was possible to introduce a system of trading in these codified property rights, allowing managers the flexibility to better manage their enterprises (in some areas last year as much as 80% of water delivered was traded). The water rights system also provides the basis for improved environmental management. The parallel system of charging for water services inthe M-Dis quite separate from the sale andpurchases ofwater rights,and exists to ensure that the income of water supply agencies i s adequate to cover ongoing maintenance and projected major capital replacements. Three lessons may be drawn from this successful achievement of sustainable financial management and sustainable resource use: First, the primary means of balancing supply and demand for water resources is definition of water rights consistent with available supply. This i s the approach followed inAustralia, Israel, the US,and elsewhere. Second, defining water rights is contentious and dfficult at the best of times. Where water i s already over-allocated so that "tail enders" often get no water, or fresh aquifers are consistently overdrawn to meet current demand, defLning and enforcing sustainable water rights i s an enormous political and social challenge. T h i s i s the case inmany water-short developing countries. Third, the primary role o f water pricing in irrigation i s not to balance supply and demand, but rather to achieve sustainable financing. Implymg, as the Economist article does, that pricing water has a central role in achieving the required resource balance is to grossly mislead policymakers facing the challenge of reducing water consumption to a level consistent with long term availabllity and proper environmental management. The solution inevitably requires stable and well specified access rights to water, institutions with the capacity to manage the water access regime, and appropriate water pricing to ensure the long term operation o f the infrastructure. DonBlackmore Chief Executive Murray-DarlingBasin Commission Australia Chris Perry, Professor, Economics o f Irrigation, Cranfield University, UK In India there are pressures at all levels for clarity and formalization of entitlements to use an ever- scarcer resource. T h i s ranges from the local level (villagers who have stored rainwater in Rajasthan, and downstream irrigators in the Vaigai Basin, for instance, as described in Section 2) to the internationallevel (between India and its neighbors, for example). After years of academic discussion of water entitlements, there has recently been an important development, since the State of Maharashtra has, after years of study and extensive consultations with community and all political parties, passed (in April of 2005). The Maharashtra Water Resources Regulatory Authority A c t of 2005 , the heart of which i s the creation and management of a water entitlement system p o x 4). Box 4 The Maharashtra Water Resources Remlatorv Authoritv Act of 2005134 As described in the background paper by Mara Saleth: "The creation o f water entitlements system is at heart o f the MWRRA Bill. The bill clarifies the legal issues and contemplates the establishment o f the institutional arrangements needed for the distribution, enforcement, and monitoring of the entitlements. While establishment o f individual and transferable water entitlements i s the long terms strategy, the Bill adopts a politically and administratively pragmatic intermediate strategy o f establishing bulk water entitlements for entities such as water user organizations, urban and rural water supply agencies, and industries. Notably, water entitlements are not ownership rights but only usufructory rights defmed involumetric sense. Such entitlements cover both surface and sub-surface water sources. The water quota implied in the water entitlements can be transferred, sold, and bartered either in part or in fd. Water entitlements also carry with them the correlated duties including payments, efficient use, and quality maintenance. The bulk water entitlements will be defmed and implemented within a basin and sub-basin framework. Whde the A M W R R A will allocate bulk rights, the basin organizations and user organizations at lower level will have responsibility in the day-to-day monitoring and enforcement. Adequate provisions are also made for resolving conflicts and grievances both at the local and regionallevels." T h e issue of water entitlements i s a sensitive and controversial one, in India and elsewhere. T h e experienced Indlan consultants who contributed to this report -- several of whom served or serve in high positions in the Union Government -- consider h s issue to be central, and one that has to be addressed and resolved. And every discussion with users comes back to the pervasive question of lack of clarity of who has the right to use what water. There i s no issue more central for the effective management of water in India, and more important in reducing what the Finance Minister has described as the "growing number of little civil wars"135 over water. This is an issue on which the Union Government should be tahng aggressive leadership, since, in the words of Chattrapati Singh "to make the state accountable and make water use equitable for all, a number of amendments are required in the Easement Act, the Irrigationlaws, Panchayat and Municipal Corporation laws, Water Supply Acts and other laws related to water"136. Far from doing this, the position of the Union Government is to actively discourage public dxussion of water entitlements, "because it i s too sensitive". O n e of the great transformations in India over the past fifteen years i s that there are large areas of the economy in which the response to n e w ideas i s no longer "no, that dnot work in India" and i s rather "why not"? But in the government-dominated water sector this change of perspective i s partial at best and most n e w ideas are rejected as <`this i s okay for advanced economies, but cannot b e done here". In this context, it is instructive to note that China is now committed to putting in place a system of water entitlement~'3~,and to see that in neighboring Pakistan Punjab a better-defined water entitlements system has been in place since 1991 at both the provincial and canal command level, and that, as described in B o x 5, the Federal and Provincial governments are moving to make the implementation of this water entitlement system more transparent and verified. Box 5: Towards a tranwarent water entitlement recrime inPuniab. Pakistan The Indus Waters Treaty shows very clearly that a well-defined set o f entitlements, w h c h are monitored by both stakeholders, and which have clear enforcement mechanisms, can provide a high (not perfect) level o f trust, even when the parties involved have literally gone to war several times. The IW i s a great example of how "good fences make good neighbors". WithinPakistan the issue o f provincialwater entitlements is, as inIndia, a controversial issue. In1991Pahstan's four provinces concluded a 'Water Accord" which allocates the waters o f the Indus Basin, and defines the way in which additional assured water will be shared. There have been important deficiencies in the transparency with which the Accord has beenimplemented, deficiencieswhich Pakistan i s now moving to overcome. A very important element o f the Accord i s that it formalized the entitlements at the intra-provincial nora level. Consider the case o f Punjab .- . -- l l C I" fB( iu, I1mrcci " - . --.-_-_-"- I l t w o ._. -IAUW._-" IWL "._...- - ax "--."._._ muw im " as an example. The allocations to APR 1 242 0 1 1 8 8 3 3 9 2 9 4 3 6 0 4 9 1 3 2 6 G O 3 the 24 canal commands are specified 2 247 0 7 I 8 108 3 7 3 4 5 1 6 4 a 3 018 3 4 6 4 7 3 2 8 1 I 1 2 0 133 '15 4 5 1 3 6 4 7'3 0 6 4 9 8 2 5 for 10-daily periods in both the M A V 1 301 1 3 2 1 160 8 0 S 9 7 6 6 6 I O U 0 7 5 4 9 3 7 2 3 0 8 2 0 l l 1 7 2 8 7 6 1 9 0 6 8 1 1 6 1 1 5 5 1008 Aharifand rabi seasons in the annex 3 316 2 4 7 7 181 9 2 a 3 e s 6 8 1 1 9 1 3 5 5 m a to the Accord, based o n the hstoric JUN 1 3 2 3 7 0 2 3 1 8 5 9 4 6 6 105 6 8 130 1 7 5 A 1091 1 3 3 1 3 6 2 7 I 8 7 9 7 6 7 101 6 9 1 1 5 1 8 B b 1 1 7 2 allocations for a five year period in 3 3 4 0 4 0 ? 7 1 9 1 9 8 6 7 1 0 7 8 7 140 1 8 5 7 146 the late 1970s (Figure 58a)I38. The JUl I 327 5 4 2 2 1 9 2 9 8 6 6 i o & b b l a 3 , I 5 8 1148 7 I D 0 5 0 1 0 1 ? 0 R t I 7 D I 6 1 1 1 9 1 7 6 . 1014 administrators of the allocation 3 7.78 6 l 1 8 18n 8 7 5 1 a 6 s 8 118 i n ~7 1000 ALlG 1 1 9 2 5 8 1 7 I?( 8 2 0 3 9 6 6 0 115 1 8 4 8 IO03 system in Punjab apparently respect 2 313 6 1 1 8 1 8 3 8 3 6 3 I O 8 8 3 1 1 3 l a 5 4 I Q S 7 ? 3 4 6 4 8 2 0 706 8 8 1 1 % E 6 138 $ 8 6 0 1183 these, for the most part. The 1 0 1 SEP 1 3 3 9 4 4 1 1 2 1 0 100 8 8 1 1 1 1 4 4 1 s 5 1 1 1 ~ 2 Irrigation Department keeps detailed 2 339 3 7 2 1 zoo s e 6~ 108 cE aa 7 4 0 1 8 3 8 ~ I U I 3 331 2 3 2 2 1 9 6 S 9 d g 1 1 0 6 8 130 l a 5 S 1 1 2 0 records o f the entitlements for each 7OiAl MAT 11 18 1 2 4 0 7 d 6 3 1 307 2 15 3 4 0 2 3 7 e 19 066 187 3707 season, o f the amounts o f water actually delivered and o f the Figure 58a: PakistanPunjab canalentitlements from the 1991Water "balances" for each canal command. Accord Source Gowrnrner* nf Pakistan 1991 (For example, as can be seen inthe first few entries for the current season, a number o f canal commands did not wish to receive their full shares, but they get "credit" for this, and can use these saved amounts later in the season.) Ths system is very close to something that would be ideal. The one big missing piece is the transparent, verified, implementation of the allocations, a direction inwhich Punjab i s now committed to move. O n e of the many virtues of an entitlement system i s that, once started, it induces a strong demand from users for better measurement, transparency, regulation and information, issues which are an integral part of "the water instrument package" and to which we now turn our attention. A central feature of modern water management in a liberalized economy and democratic environment i s that of openness and transparency. In most countries now all relevant information - hydrological, performance, planning -is available publicly, on the web and in real time. Representative websites show this clearly: TVA in the U S (www.tva.gov), the Murray Darling Basin Commission inAustralia (www.mdbc.gov.au), the M i n i s t r y of Water and Forestry in South Africa (www.dwaf.gov.za), the National Water Agency in Brazil (www.ana.gov.br) to cite just a few examples. Despite being one of the world's IT centers (and thus having immense capacity) I n d a has been slow and uneven in adapting to this changed information environment. It remains very difficult for a user to even find out what data might be available -- the web-site for the Ministry of Water Resources (httn://wriiiin.nic.in) does not provide any Qsaggregated or real-time hydrologc information. After much &gent e n q u q a persistent and connected user i s duected to a web-site set up by the Central Water Commission under the World Bank-funded National Hydrology Project (www.india- water.com). And then even a user with a high-speed connection and moderate slillls finds it impossible to find out what data are actually available and how to get them. T h e situation for State Governments is the same, even for the leading IT states (htttx/ /waterresources.kar.nic.in and htm://www.aDonltne.pov.in) is even worse. InIndia the "hydrologc data secrecy" culture has changed slowlyinrecent decades, even by standards of the sub-continent13g. The state of affairs is dustrated by the most highly-discussed water issue in recent years in India; that of "linking rivers". T h e National Water Development Agency (NW'DA) had been studying possible inter-basin transfers since 1984. Those who championed the idea, and the many who h a d reservations, quite reasonably requested to be shown the data, the analysis and the plans. Despite 20 years of study, none of the data were made available. This denial of information naturally leads to suspicion about "secret plans" and about incompetence and poor performance hidingbehind the mantra of "national security". Recently there has been some modest progress. Now the "linlung rivers" website does have the feasibhty study for one of the proposed links (the Ken-Betwa link) o n - h e (www.riverlinks.nic.in). Under the National Hydrology Project ". ..the Hydrology Information System data i s currently generally accessible to the user community, except in situations where data i s considered sensitive and higher-level authorization i s required140." "Generally avadable" i s a relative term -- a Google search turns up no reference to these data on the web, and requests have to be made in writing to the government. In other areas Indian practice is changmg. - as dustrated by Indian Radways To someone farmliar with the drama of getting tickets on Indian Railways in the past, the current system was unimaginable. Nowreservations can be made easily online, inwhich tickets are delivered to Delhi addresses within 12 hours, and inwhich electronic refunds take place in a week. If other democratic countries (who also have neighbors with whom they share water, and several of whom have federal structures with complex inter-state water matters) can make all water data -- includmg hydrological data, reservoir status and operation, water deliveries, budgets, costs, agency performance, etc. - easily accessible in a user-friendly format on the web in real time, why can t h s not be done in India? It i s obviously not a question of capabdtty but one of d and attitude. There i s no doubt that this change would stimulate a chain reaction of accountabdtty, participation and demand for more and better data w h c h would transform the culture ofwater management in the country. Finally, there i s a powerful feedback loop between data availabdtty, quality and support for data collection activities. Global experience shows that hydrology data systems dbe maintained only when there are users who can get easy access to the information, who find the data they need ina user- friendly way, and who then become pressure groups on government to commit the necessary funding to the data collection activities. M a h n g this change i s a central objective of the follow-on World Bank-supported National HydrologyProject. This Report has made clear that in the future there dbe two primary challenges facing the Indian water sector - first to improve the quality and coverage of formal public water supply and irrigation services and second to regulate the use of groundwater. Inboth cases the government has to play a quite different role from that which it plays at present. On the provider side the government has to corporatize the government-run service providers, and allow the entry of private and cooperative service providers. This means that the service sector dincreasingly b e characterized by contracts between (public and private) providers, on the one hand, and users, on the other. These contracts d describe the rights and responsibilities of both parties, in terms of both water and money. A key requirement, therefore, i s that government develop regulatory capacity for balancing the disparate interests of the providers, the users, and the government itself (as shown in Figure 59). There i s now growing experience in Indta with independent regulation (in the telecommunications and electricity sectors). T h e Maharashtra Water Regulatory Authority is an important first step towards buildmgsuch capacity. I t dtake some years and a process of trial and error to find the right forms for such regulation , especially in a sector in which the notion of contracts and competition and transparency have been almost entirely absent. It i s critical to take a learning approach to this, and not to see the first signs of dtfficulties as a reason to go back to "the oldways". Figure 59: Participants in modern regulation On the second great challenge - groundwater management - the issue of regulation is also key. Global experience shows that moving from an anarchic groundwater management system to one where there i s a balance between abstractions and recharge i s a very dtfficult one, which i s less than perfect even in very good governance environments. Experience also shows that command-and- control type of approaches - "prohibiting more abstractions" -simply do notwork,again even in relatively easy environment^'^^. T h e essential ingredtents of "the least unsuccessful approach" are clear142. Groundwater management requires: a legal framework which constrains the rights of people to pump as much water as they wish from their land; the separation of land rights and water entitlements, with the latter usually based on historical use; strong government presence to give legal backing for the development of participatory aquifer management associations and to provide the decision-support systems which enable aquifer associations to monitor their resource; and, above all, clarity that the primary responsibdq for the maintenance of the resource on which they depend i s with those who have entitlements to use water from a particular aquifer. There are many dtfficult technical details to b e worked out - for example, the tradeoff between hydrological reality (which would suggest large aquifer associations in the many extensive aquifers) and the transactions costs of includtng large numbers of small farmers (which argues for smaller associations). Experience in other very large aquifers (such as the Ogallala aquifer which r u n s from Minnesota to Texas and in Mexico) shows that it i s perfectly practical to chop a single aquifer up into a large number of "semi-independent" aquifers which are run by a reasonable number of users143. In this case itis very important that the best does not become the enemy of the good! As described in Section 2, the "water sector" in India is in severe financial distress. Nirmal Mohanty has aptly described the prevahng model as "Build-Neglect-Rebuild". There i s an enormous liabhty from deferred maintenance. And the stock is such that even, once rehabhtated, the annual requirement for maintenance and rehabhtation would be about equal to all public funds currently invested. But then there are also major new needs -for providingservicesto those who do not have services, for meeting the needs of a growingpopulation and economy, and for the massive investments needed to meet the "debt to the aquatic environment". Inaddressing this issue, there are some "red herrings" which have to be addressed. First, although the massive distortions in the pricing of water services are justified "in the name of the poor", it is, paradoxically, the poor are the major victims of these distortions. And, as pointed out by Vaidyanathan144, it was "in the era of redtstribution (form 1964 onwards) that prices began to get out of line with costs". Rajiv Gandhi famously said that no more than 15% of the benefits of public distribution programs actually reached the beneficiaries, a figure which i s believed to have changed little. In the case of water subsidies this is probably true, too, because the subsidies go where the water goes, and this is to those who can manipulate the system and get access. Those without power - the poor -- are rationed out of the system. Far more equitable, as described by Sebastian Morris 145 would be a system which provides subsidies to people, not providers, along the lines of the "water stamps" program in Chile. In this program the poor are given vouchers for the purchase of water, for which all pay the tariff required to cover operation, maintenance and capital costs. T h e disconnect between prices and costs induces very large overall economic costs. As pointed out by Sebastian Morris146, "price based subsidization has the major infirmitythat it robs prices of their crucial role.. . of informing investment and input choices and the du-ection of technical change". Morris147 also points out that "arbitrage of the difference between tariffs and wdhngness to pay'' i s the fundamental source of the endemic corruption in these services. Again there i s a massive and growing gulf between principles, policy statements and practice. T h e 1991report of the Vaidyanathan Commissionon Irrigation Pricinglays out most of the critical issues. "much of the information w h c h i s crucial for a proper assessment of the performance of irrigation systems i s hardly even compiled regularly, m u c h less analyzed" "the all-round deterioration in the financial performance of irrigation projects i s stark and nearly universal" 0 "it is difficult to accept the case for subsidtzingsuch a user-oriented (sector) as irrigation" "the government i s not in a position to sustain subsidies on irrigation on the present scale" "it is not possible to determine howmuch of the implicit subsidyis attributable to inefficiency and how m u c h really benefits farmers because of the underpricing of water" "the discretionary powers of the bureaucracy and the attendant opportunities for "rent-seeking behavior" provided by the existing system are powerful reasons for the functionaries to oppose any change which reduces their power.. ." So what can be done to start the arduous but central process of arresting the rot and puttingthe water sector in India back on track? First is a realization that there is no such thingas a free lunch. There are only two sources of revenue to pay for the (rising) costs of these services - taxes or user charges. Ifgovernments are not d n g to raise either of these then, as emphasized by Rakesh Mohan148 , there is simply no way forward. For the foreseeable future, there will need to be budget support (taxpayers' money) for irrigation. But it is also obvious that user charges simply must be increased, for a host of reasons. That said, it i s clear that starting with the idea of increasmg charges (for bad services provided by corrupt and inefficient agencies) will quite reasonably be resisted. For this reason the idea of bringingtariffs into balance with costs must be the third leg of a triangle in which the first two legs must be "improve services first" and "provide those services in an efficient and accountable manner". "Yuwill pay for the costs of those services" can come only after the first two have been clearly done and are so perceived by users, Figure 60 gives an interesting example of how this was done in an urban water project in Africa. Providmgsubsidies for the "transition costs" for moving a low-level to a high-level equilibrium (the triangle in the figure) is what Union Government and World Bank and other agencies should be supporting. I Tariff to cover the full cost of a pod service TARIFF AND COSTS Initial tariff 0 Yeor 7 Figure 60: From low level t o high level equilibrium in Conakry A particular challenge in India is that households have made such large personal investments in "coping with poor public services". This has not worked badly - a middle-class family in any of the major cities actually gets water twenty-four hours a day, even though the water from the uthty comes for just an hour or two. Middle class families have done this by making large investments to cope. But the existence of these "sunk costs'' poses a particular challenge, because these users wouldactually benefit little in the short run from more reliable supplies. This means that, again in the short run, they would oppose higher user charges, even if service quality improved (as is evident in Delhi in 2005). They would only become supporters in the medium run when they understood that they did not need to replace their assets (their pump and overhead tanks and water filters) because they could now rely on the piped distribution system. At the very least this requires that information on improvements, and the savings this brings in the short run (lower electricity costs) and medium run (no replacement of equipment for coping) needs to be made clear and communicated effectively. It also means that the time span for bringingtariffs in line with costs needs to be tailored to t h i s reality. An addtional factor that needs to be factored into the design of tariffreformis the fact that the status quo is quite satisfactory to many in the public agencies who profit from the discretion which they exercise. This is - see the last quote from the Vaidyanathan Commission above - a central, perhaps the central challenge for progressive government. As David Mosse notes in his book on water management in T a d Nadul? "Only the rare engineer supports PIM. Most consider it a fad that should wear itself out in time.. . with fear for the loss of gratuitous incomes should farmers begin to function independent of the irrigation department" T h e anti-reform rhetoric of "increased tariffs wdl hurt the poor" and "this wdl cost jobs" have been honed to a fine art, and have the strong support of some political parties. There i s no easy answer to this issue, butitis clear what some of the elements that need to be addressed are. On the "carrot" side there are creative ways of providing n e w opportunities for those in the public sector agencies to participate in a n e w service arrangement. As was done in a successful process in Mexico City, public workers were given training, capital and preferential access in setting up firms who could compete for contracts which were handed over to the private sector. On the "stick" side, the government itself is complicit in, and even the architect of the present arrangement and i s unlikely to be an effective change agent. What i s needed is, as described earlier, to bring as m u c h as possible "into the light of day" - Who has entitlements to the water? What i s the contract between the provider and the user? What are the penalties for non-performance? What i s the performance of the dfferent providers? Finally, it i s important to note that, as Sebastian Morris150 has aptly noted "the issues of pricing, subsides, water rights and financing (and he might have added inefficiency, lack of accountabhty and corruption) are deeply interlinked". Just one dustration of this i s that, as described earlier, the lack of definition of entitlement to IGishna River water has led to ill-advised investments in Maharashtra which contribute to about 18Yoofthe fiscal deficit of the State151. India has a long and justly-proud tradition of buildng and managing of some of the largest and most complex hydraulic engineering works of the world. And India justifiably takes great pride in the world standing of some of its institutions of technical education. Yet the fact i s that, compared with all developed and middle-income countries, I n d a has not developed the human resources necessary to meet the water needs of a growingand changing country. T h e mind-set of the state bureaucracies i s one that may have been appropriate forty years ago, but it i s not well adapted to the new challenges. T h e major reason why this i s so is, of course, the set of incentives which stultify indviduals in the public water organizations of India today. T h e Planning Commission(152has described some of the things that need to change: "The approach of the government is normally hierarchical rater than functional and the lack of due importance to professional and functional aspects tends to blur responsibhties and inhibits specialization. Inter-disciphary teamwork, which is so essential in water sector i s absent. T h e links between academic institutions and water sector personnel are poor with the result that the academicians are kept away from important practical issues and problems, and water managers are not exposed to latest technologies." To this list could be added another stark contrast with many other developing countries. The water professionals of India, with few exceptions, have had no protracted exposure to modern water management practices in other countries, either through education, post-graduate training, work experience or even study tours. T h e weltanschauung of the Indianwater sector i s parochial. Unquestionably the change in the way in which government water organizations function i s at the heart of the needed water reforms in India. And as these organizations evolve, they dneed quite different types of water professionals. Vijay Vyas153 notes: "TLU recently water management was identified with irrigation management, and within irrigation department irrigation engineers dominated in controhng and supervising water resources. Even now role of other disciplines is not fully appreciated." As withmost other statements on a country so complex and large, this is not exactly true. Inthe 1970s there was a substantial FordFoundation-funded program managed by the Harvard Water Program and involving Indian water professionals from some of the elite institutions (such as the CWC) and universities (including Roorkee, the D e l h i University Institute for Economic Growth, and the IITs). A substantial and impressive cadre of multi-disciplinary Indian professionals was trained and returned to India. They describe, thirty years later1S4a great personal experience that somehow died upon their return. T h e factors appear to be complex. There are "pull" factors, including the spectacular opportunities in IT which most of the best students can not resist. And there are "push" factors, because bright students do not want to be condemned to a lifetime stuck in antiquated government institutions. Whatever the cause, the bottom line i s that a central part of any reform program would b e a massive investment inimprovingthe quality and diversity of professionals engaged in the water sector. T h e era in which major water infrastructure was built in India was one in 100 which the hegemonic -Anticipating ecosysteminpacts idea was that the 80 -Inforgtionby disclosure aectdpeople effects on -Particpmon adverse affected people was a price that had to b e paid 60 for the progress of the Y O majority. In the 40 intervening decades this tradeoff to be false, on both ethical and 20 practical grounds. As shown by the World 0 I I Commission on Dams 4950 1950s 1960s 1970s 1980s 1990s (Figure Goa) there have Figure 60a: How social and economic performance of dams has improved been major globalIy improvements in the Source. Worid Commission ofi Darns,2000 ways in which affected people participate in and are affected by major water projects. India remains, a country in which there are serious issues about how affected people - many of whom are from Scheduled Tribes -- are dealt with in major infrastructure projects. There has been considerable progress, especially by modernizing hydropower companies, but there i s stiU a long way to go before practice in India can compare favorably to practice in, say, China, where resettlement is considered to be "a development opportunity" rather than a cost155. M u c h of the major water infrastructure which d be built in India in coming decades includes hydropower. Hydropower projects generate large revenues, and in most cases the number of people to be resettled by hydropower projects in I n d a dbe relatively small (Figure boa). I t is therefore a doable task, with few dfficult tradeoffs, to ensure that local people are major beneficiaries of such projects. This i s not only ethically the right thing to do, but it means that costly delays in project implementation can be avoided. This means that developers need to see the economic and social development of local communities to be as important as the technical aspects. D a m developers in I n d a need to recruit and value excellent community developers, just as they recruit and value excellent engineers. There are important issues of responsibhty which need to be worked out between project developers and state governments (to whom non-state developers pay massive royalties of 12% of the gross value of the power generated). Prior to project approval developers and state governments must agree on who dfinance and manage local development activities so that affected people become the first beneficiaries of such projects. T h e bottom line i s that these new hydropower projects should b e a big boost to local economies, and that the aspiration of developers and host governments should be to make such projects so attractive to local people that communities compete with each other to become "host communities" for such projects. As demonstrated in this Report, the primary water challenges facing the Unionand State governments include - to dramatically improve the quality of public irrigation and water supply services; to modernize the systems for allocating and monitoring surface and groundwater resources and to improve the quality of the poor and deteriorating water-related environment. I t is instructive to differentiate two different water-related environmental challenges. Category One are issues of environmental degradation that would improve dramatically if water were used and managed more effectively and efficiently; and Category Two are issues that require supplementary actions and resources. Two messages come out of the background paper on the environment by George Vamghese15G. First, if the recommendations dscussed in earlier sections of this report -water entitlements, water pricing, accountable institutions, effective regulation - were implemented, the majority of water-related environmental problems in India would be ameliorated to a significant degree. Specifically this would mean and end to wasteful water use in both agriculture and urban areas, it would mean reductions in mining of aquifers and the consequent quality problems. I t would also mean shifting the focus of government attention away from the traditional areas (of constructing and operating water supply infrastructure) and "creating fiscal space" for investing in environmental quality and other public goods. An important area where mindsets have to change is that of instream flows. Any water flowing out of a river basin i s still seen by many water engmeers as "wastages". But this is changing, with the Government of Andhra Pradesh, for example, recognizing that some flow into the Godavari Delta i s necessary for preservation of the coastal zone and the fisheries on which substantial numbers of people depend's'. Global comparisons show that there i s something like a "ICuznets curve" for many indices of environmental quality. As illustrated schematically in Figure 61, in the early phases of development there i s typically a sharp decline in environmental quality. As economic growth i s sustained, however, societies place a higher value on environmental quality, and they have more resources to spend on the environment. For many measures of environmental quality there i s then a slow but steady clunb out of the environmental abyss. The example of the Yamuna (in Section 2) suggests that parts of India and for some measures of environmental quality, the longclunb i s starting. Good I Bad Low Moderate Medium High Income per capita Figure 61: The "Kuznets curve" for environmental quality Source: World Bank 1992 Ths Report (and many other documents) make it clear that India is going to have to make major changes in the way in which it develops and manages its water resources, and that this process has to start soon. Tushaar Shah158 has described several types of reform initiatives in India, all of which have "failed to produce broad and deep changes." They include: "[a] a reformist measure i s proposed, dtscussed and shelved. T h e draft Groundwater Regulation bdl is the case in point. It i s tossing around for 35 years; yet has found few takers because few political leaders are WLLling to absorb the transaction costs (including political costs) of seriously implementing it;" ``PI boldreformist a measure i s proposed, discussed and dduted by removing all Ifficult-to-implement elements, resulting in paper reform. India's Water Policy announcements of 1987 as well as 2002 are goodexamples. Nothinginthe way India's water sector function has changed as a result of these." "[c] a bold reformist measure i s proposed, discussed and launched but cold-stored in the face of popular opposition or insurmountable dlfficulties in implementation. Efforts by many Chief Ministers to meter electricity supply to tubewell irrigation during recent years i s a good example. So are Maharashtra's 10 year old law to protect drinkingwater wells from groundwater overdraft by irrigation wells, and Andhra Pradesh's more recent land, water and trees act." "[d] a bold reformist measure is introduced and enforced to produce desired outcomes. Examples of this are rare; Chennai's groundwater law, which has begun to bite, is an example. Another is West Bengal's enforcement of permits for n e w electricity connections for irrigation wells. In Chennai`s case, extreme water scarcity has likely created popular support for strong measures. In West Bengal's case, restrictions began to be enforced long before well irrigators organized into a powerful political force.'' "[e] finally, there are examples of reform ideas that refuse to die despite recurring evidence of their failure to deliver. Participatory Irrigation Management i s one such; India has been trying farmer management or irrigation for nearly 150 years. While there are islands of excellence, there i s no evidence of WUAs having produced sustained performance improvements on a significant scale. S d a r communitarian models have dominated for decades institutional dlscourse in culture and capture fishery, watershed management, water supply systems. Countless studies show that fishermen co-operatives are almost always fronts for contractors, that watershed associations seldom maintain structures after fundmg r u n s out.'' Review of s d a r reform water reform efforts throughout the world suggests that the guiding mantra must be "principled pragmati~rn"~59."Principled" because principles matter, a lot. And "pragmatic" because principles can only b e translated into practice by following a step-by-step, persistent process which "fits" with the local culture, people and environment. This section reflects on some of the lessons of "principled pragmatism" in water reform processes elsewhere160, and from reform processes in other sectors in India. They are presented in the form of "rules" (really suggestions) which a reforming government might keep in mind. There i s m u c h that aspiring water reformers can learn from reforms in other sectors - such as power and telecommunications and transport. But it is also true that water is, and is perceived to be, different from these other "created" sectors in many fundamental ways. T h e resource economist Kenneth Boulding's ode to waterIG1captures many of these distinctions very well. Water i s far from a simple commodity Water's a sociological oddity Water's a pasture for science to forage in Water's a mark of our dubious origm Water's a link with a distant futurity Water's a symbol of ritual purity Water i s politics, water's religion Water i s just about anyone's pigeon Water if frightening, water's endearing Water's a lot more than mere engineering Water i s tragical, water i s comical Water i s far from the Pure Economical. This specialness does not mean that reform is impossible, or that water reformers can not learn from reforms in many other areas of public service provision. What it does mean i s that there has to be a particular emphasis on public discussion and on addressing the many concerns which people legitimately have about water. Habits of water management and use, and the organizations and practices involved, have evolved over time and have, at some time, "fitted" the particular prevalent economic, social and environmental circumstances. Change i s not easy or welcomed, unless there is a very strong need for change. Abstract and idealized statements (such as "river basin management" or "integrated water resources management", the mantra of the international community in recent years) have some resonance with professionals, but do not constitute a reason for organizations and people to change the way water i s managed. Because changes are difficult and often wrenching, they will be undertaken only when there i s a powerful need and a demonstrated demand for change. Global experience162 shows that the impetus for change i s usually either a serious breakdown in services, an environmental f d u r e which affects large numbers of people, or a fiscal crisis which makes the status quo untenable. In India today there are a number of settings where there is a powerful need and demonstrated demand for change and which are, accordingly, the areas where reformers should put their initial efforts. These include: - Cities where individual households are facing greater and greater difficulties inmaking their "coping strategies" work, because the groundwater option i s no longer tenable. T h e case of Chennai (described in Box 2) i s such a case, where the political pressures are great and the State government i s being forced to confront the systemic issues. In some cases these responses are of the "silver bullet" variety (hoping that institutional changes can be avoided by getting someone else - Union Government, as always - to pay for the very costly desalination can resolve the problem, for examplel63). But it is increasingly clear that Chennai has to seek a range of new sources of supply, as well as greatly improve the functioning of the distribution cities within the city. I t is, therefore, not surprising that Chennai emerges in several places in this report - in establishing incipient "water markets" for the voluntary transfer of water from farmers to the city; in "purchasing" water from the neighboring state of Andhra Pradesh (albeit in such a poorly- specified contract that the city seldom gets the water); in mobhzing n e w forms of finance (from the Sai Baba philanthropic foundation); and in pushing for n e w forms of inter-state agreements on water (including "river linhng"). The number of cities and towns fabng into s d a r circumstances (includmg the metropolitan area around Delhi, where the groundwater table i s falling almost a meter a yearlG4) i s growing rapidly, and the political pressure to find new institutional arrangements to meet their needs is surularly strong. Dealing with urban bulk water issues i s thus an opportunityfor reform in water allocation practices. Fiscal constraints will, sooner or later, constitute a heavy pressure to improve the financial performance of public irrigation and water supply systems, both of which are major sources of red ink. This will force cities to look for lower-cost sources of supply - calculations by the Hyderabad Metro Water Supply and Sewerage Board, for instance, show that the city could buy water from farmers in the Singur area at less than half of what it would cost to bringwater from Nagarjunasagar on the IGishna River. Industries in areas where water availabdtty i s a serious constraint. I t is a commonplace in India that the availability and quality of infrastructure i s one of the major threats to the continued health of the Indian economy. In the words of the Finance Minister, "India's most glaring deficit is its infrastructure deficit." 165 Unttlrecently "infrastructure" meant ports, railways, roads and electricity. Now there is a palpable sense that water i s joining this list, with the two major industrial associations - FICCI and the CII - both becoming very active on water issues. Industry leaders have a major role to play in local politics, and can become powerful voices pushing for improved water management at the local level. An example of this i s the path breahng takeover by the texttle industryof the Tirapur urban water supply inTamil Nadu'66. Agricultural areas where water security i s of high importance. Agrarian India i s undergoing a quiet but rapid revolution - contract farming is happening in many places, high-value crops are displacing food grains, aquaculture i s increasing. In each case the importance of a predictable supply of water becomes vital. There has been a rapid uptake of drip irrigation and other new technologies, but these "exit options" will not be sufficient, and there will be pressures to allow water to move more flexibly and voluntarily from low-value to high-value uses. As Maria Saleth167 details in h s background paper, m u c h of this now takes place in informal water markets but as agricultural production moves to scale there will be pressures to formalize such relationships. Again, this i s an important area where there will b e demand for changes in water management practices. T h e key message i s that there are many windows of opportunity opening up for water reforms which will constitute specific, practical solutions to local problems. I t is these which dshow what can be done, and will, by producing tangible results, constitute a pressure on, and example for, others to follow. The centrality of 'Ldem~n~tration"has been well stated in a s d a r context: "We don't need the government of India to transform every aspect of In&an infrastructure," says Ratan Tata, head of the Tata companies which comprise India's largest private-sector group. "All you need i s for a private company to take over one alrport and then show by results what everyone else i s missing."l@ People are, for good reasons, always apprehensive about changes which will be thrust upon them. And when it involves something as sensitive as water, communication, discussion and information become central elements for any reform process. What would this mean in I d a ? First, there is a general tendency for government-led discussions of water policy to take place among water professionals, the vast majority of whom are engineers, and the vast majority of whom have little exposure to changing global good practice. This community of practice i s SUU -see the discussion in Chapter 2 - very m u c h a part of the "this will not work in India" school of thought, one which stdl thinks in terms of command and control (Mohile, background paper'bg) and which tends to look backward, not forward (Sekhar170, background paper). This means that discussions of reform are often severely truncated, and often quite at odds with the reality on the ground. To take just one example -- the engineers of Chennai Metrowater were emphatic that farmers would never lease their water to the city because it i s "against their culture"; once the trading was started the farmers were, indeed, unhappy, because almost all farmers wanted to trade some of their water (and the city could not buy from all). Second, there i s often an attitude by government that "there should not b e dscussion of issues of water entitlements or water reforms because these are too sensitive". And when there is a forum for discussion it i s exactly these issues which people want to discuss, because they are sensitive and central. Things are, however, changing. The process followed by Suresh Prabhu, the Chairman of the (now- disbanded) Task Force on Linking Rivers was a model of open communication in many respects. Prabhu held literally hundreds of public meetings, throughout the country, to apprise people of what was at stake, and to listen to their concerns and get their suggestions. This led to enormous amount of public discussion, not just of linking rivers, but of virtually all of the major challenges facing the water sector in India. I t put some of the most critical issues - like the need for a new, modern, approach to state water rights in a federal system -on the front burner. (The major caveat was that the machinery of government was not equipped to do its part, and the process suffered from a paucity of material available to both the Task Force and the public on the specifics of what was being proposed, and the results of the twenty years of work that the National Water Development Authority had undertaken on this subject.) There i s a palpable sense of a loomingwater crisis in India, and an opportunityand need for the Union Government to undertake a major, multi-stakeholder dialog-cum-campaign. Such a campaign would need to engage farmers with the hydrological reality of the aquifers that they currently rely on. Farmers know that suicides are increasing because, even with massive electricity subsidies, larger and larger numbers of farmers simply cannot afford to drdl deeper and deeper. They need to know that there i s simply no alternative to adjusting aggregate abstractions to the level of sustainable yield. They need to know that other countries have made such transitions, often, remarkably, with positive economic outcomes. They need to understand the combination of government regulation, user involvement, and packages of "virtuous subside^" that could reasonably substitute for the vicious subsidies that are driving their aquifers (and them) to ruin. They need to be informed that formal water entitlements would not harm them, but provide them with assets they do not now have. Irrigators must realize that in the future surface supply systems -nowso dscredted - must again play a central role. This means that there must be a new social compact for public surface irrigation systems - a compact in which users have clear entitlements, in which they pay for reliable services, which are provided by accountable, transparent and efficient suppliers. Irrigators must also understand that with h t e d resources and growing cities and industries, there must b e transfers of water from the farm to the city. They must understand that many countries have developed mechanisms for this to happen in a way that such transfers are transparent, voluntary and to the mutual benefit of both parties. They must understand that if such mechanisms are not put into place, then these transfers dtake place by stealth, without any compensation. Such a campaign would need to engage the urban middle class, who have "exited7' from public water supply systems by self provision. They need to understand that with massive urban growth and rapid aquifer depletion these "coping strategies" dnot work for much longer. They need to realize that they d,as do people in all large cities of the world, rely on effective, accountable providers of public water services. They also need to understand that there are large demands for tax revenues for true public services (such as cleaning up the rivers which have turned into sewers in all the cities of India), and that they must b e d n g to pay for water supply services (provided, of course, the provider i s efficient and accountable). Such a campaign must engage industry, so that it understands that the standard industrial response (of "captive generation of water", mostly by groundwater pumping, but also increasingly through expensive recycling and desalination) i s inherently h t e d . Industrialists must exert their considerable pressure on government for puttingin place systems -whichwork well in many countries - whereby they can purchase the water they need from d n g sellers (often farmers) for whom the value of water i s m u c h lower than it i s for industry. Such a campaign must engage the leadership of State Governments. They must b e made to realize that there i s an alternative to the current anarchic inter-state system. They must b e presented with the data on the huge costs which this system imposes on all parties (upstream and downstream ahke) and must come to understand that there i s an alternative for sharing waters (and sometimes sharing benefits) that works well indeveloped arid federal countries andwhich has worked well inInQa's international water treaties with Paktstan and Bangladesh. Finally, and pulling all of these strands together, such a campaign must engage national political leadership, again with complacency as the greatest enemy. A common commentary on InQa's economy was, in the memorable words of a Finance Minister "every budget i s a gamble on the monsoon"171. A feature of InQa's recent economic growth was captured in a newspaper headhe stating that "India's economy i s no longer a gamble on the monsoons", noting that InQa's growth in the bad monsoonyear of 2004/5 had been reduced only by about 2% (to 6% overall growth). Political leaders must b e aware that this may b e a brief and temporary escape from hydrological constraints, and that unless the economy i s put on a sustainable water platform, the "water brake" on the economy - worhng through the industrial, agricultural and urban economies as described above -- dbecome endemic rather than sporaQc. T h e urgency of this transformation is accentuated by the hkely effects of c h a t e change. T h e best projections suggest, for example, that in the western Himalayas, where precipitation and snow deposition are relatively low, glaciers are particularly vulnerable and are likely to result in, for example, a runoff "windfall" during the next couple of decades, followed by flow reductions which may be of the order of 20% for the Ganga at Haridwar, for example, by the year 2100. As for so many other reasons, this requires the establishment of a water management system which i s flexible and robust. Ideas like "river basin planning" and "integrated water resources management" have sound conceptual roots, and appeal to technicians, many of whom perceive implementation of these ideas as the path towards better water management. Useful as they are, in the words of the Operations Evaluations Department of the World Bank "progress takes place more through `unbalanced' development than comprehensive planning approaches"172. As Karl Marx (had he addressed the subject!) might have said it as follows: water reform i s a Qalectic, not mechanical process. Improvements in water management- occur when there are tensions (between users, between users and the environment, between the water agencies and the finance ministries) which can no longer be accommodated within the existing institutional arrangements. But reforms do not lead to "mukti" (liberation for ever) - they simply mean that "lower-order tensions" are replaced by higher-order tensions. Again T a d N a d u provides a useful illustration. State-wide approaches to water reform have b d t some important building blocks, but have made few contributions to actually resolving specific problems. These general reforms therefore lack legitimacy and "demonstration power". But when the textde manufacturers of Tirapur actually resolve the problem of their own water service, this has a powerful demonstration effect. I t does not mean that "water problems in Tirapur are now over", but itmeans that as the issue of gettingwater delivered to industries and households is largely resolved, the focus wdl inevitably and appropriately shift to the "higher-order" problems of ensuring adequate supplies of bulk water and of dealing with water pollutionfrom the town and industries. Lawrence Summers has observed173 that the great distinction between developing countries which have progressed over the last 30 years and those that have stagnated i s not the abdity to formulate perfect policies, but the abdity to translate reasonable policies into actions on the ground. Paraphrasing Bdl Clinton's famous election mantra, "it's implementation, stupid". And so it is with water in India and elsewhere - policies and recommendations abound, some very good (such as the recommendations of the 1991Vaidyanathan Commission). But as Tushaar Shah174 has emphasized., what matters i s identifying improvements that can actually be implemented. Any journey requires a knowledge of the destination and a road map for getting there. However the journey itself i s taken step by step. And so it i s with water reforms - there must b e a long-term vision, but immediate attention must be on puttingfEst things first - to sequencing and prioritization. The practice of (aborted) water reform by government agencies in India (reinforced by some of i t s external supporters) has often been to make everything (and therefore nothing) a priority. A major recent water commission for an advanced state in India came up with a set of over 340 "recommendations", ranging from major legal changes to what crop should be grown in what district. S d a r l y a major 1998 World Bank report on the water sector in India175 made 170 recommendations, all presumably to be done simultaneously. A relevant example of a principled but pragmatic approach to sequencing relates to that of "cost recovery" for irrigationservices. Cost recovery is, of course, an appropriate aspiration, butit is almost never the place to start. Farmers will not and should not, pay for the costs of poor services which are delivered by inefficient and corrupt agencies. T h e first step must b e to address the issues of accountability and efficiency (as described earlier in this report). Once services are improved and there i s t r u s t in the service provider, then tariff increases to bring revenues in h e with costs becomes possible. As shown in Figure 60 on the urban water supply example in Guinea, Africa, public funding wiUgenerally be necessary, on a declining basis, to "finance the transition". Water reform processes are never short, decisive affairs, A review of the experience of rich countries by the OECD176 shows that progress in water reforms takes place over decades, not years, and that even the most advanced of countries is only about half way towards the ideal forms of water management described in declarations of intent by the countries themselves and by the international community177. In the case of a vast, federal democratic country like India, as described by the Deputy Chairman of the Planning Commission178 "pluralistic and highly participatory processes forces one to gradualism. ..." T h e world over citizens are either concerned or skeptical about announcements of "reform", with some advocating abolition of the word from the public policy lexicon. "By casting their agendas as reforms, political advocates don't aim to stimulate debate and dscussion. They aim to suppress it.They aim to stigmatize adversaries as nasty, wrong-headed, selfish or misinformed. The trouble is that as a society, w e need debates over principles and practicality. All reforms are not desirable, at least not to everyone."l79 T h e corollary i s that public support donly bddif there are visible, tangible results from the changes w h c h are advocated. T h e key i s "show me". I t certainly can help to show opinionleaders that these changes have been affected in other countries. T h e formation of the famous French River Basin management system in the 1960s was strongly influenced by the successful experience of the Ruhrverband, established in neighboring Germany in 1916. And the political leaders of the water reform process in Brazil ascribe high importance to a study tour of Mexico and Colorado at a critical time. But there is nothinglike demonstration on home territory. And since changes are always difficult, it i s imperative to start changes where conditions are propitious - where there is a real demand for change, where there are champions, and where it is possible to show results. For example, there were real gains from the organization of Water User Associations in Andhra Pradesh in recent years, gains which were appreciated by visiting Haryana farmers who foundin the AP "success'' some inspiration for s d a r efforts in their home statelgo. On the central but complex issue of water entitlements the embryonic experience inChennai (Box 2) was a relatively "low hanging fruit". So too would the use of water entitlements to resolve the water conflicts afflicting the Bharatpur Bird Sanctuary. If and when these and other "easy cases" mature, then they will provide a beacon for tackhng the bigger and more difficult challenges of water entitlements. Almost any progress is progress worth making, whether or not it measures up to some abstract global notion of "excellent". T h e idea that practice can go from terrible to perfect in one fell swoop i s one that i s attractive to outsiders and i s sometimes adopted by financial agencies (so-called Volvo instead of Volkswagen standards181). But it fits poorly with the one-step-at-a-time gradualism which characterizes water reforms, everywhere. Consider the case of subsides for electricity for groundwater. There i s no doubt that this is a problem w h c h must be addressed, and that the longer it takes to address the deeper the groundwater, the greater the subsides and the more difficult it will be to find a way back. But the fact i s that farmers are now so heavily dependent on electricity subsides that drastic e h n a t i o n of these would simply put many farmers out of business (see Figure 62), and, for this reason, be politically infeasible. T h e task must be to address this issue on multiple fronts, which in this case would include an improvement in the quality of electricity, the appropriate pricing of the low-opportunity-cost electricity which farmers use, and the introduction of a set of "virtuous subsid~es" (as was done in Mexico, for example, in refurbishing inefficient equipment and for adoption of water-efficient technologies) as electricity subsides are reduced. 250% 13% -150% $ d R3 s--154% 6 -200% iu 21 Figure 62: Impact of eliminating electricity subsidies on marginal farmers in Haryana I Source: Bhatia 2005 A good example of the "the best is the enemy of the good" rule at work is the justly-famous Indus Treaty, which has, since i t s inception, had its detractors in both I n d a and Pahstan as "not fair"182. Confronting the Palilstani detractors of the Treaty Ayub K h a n gave advice which i s relevant for all would-be water reformers: "..very often the best i s the enemy of the good and in this case we have accepted the good after careful and realistic appreciation of our entire overall situation.. ...thebasis of this agreement is realism and pragmatism.. .."I83 T h e challenges which I n d a faces in water management are environmentally, socially, and technically complex. There i s a justifiable, human fantasy that there i s a single "silver bullet" which will "solve the problem". In some parts of the I n d a water establishment today there is s d l faith that the old remedy - more dams, and variants of this - will solve all water problems and should b e g v e n near- exclusive priority. In situations where this remedy is patently impractical, then there are a host of other "supply side" solutions ranging from high-tech (cloud seedmg and desalination) to low-tech (rainwater harvesting and desilting of ancient tanks), most of which have an important niche but are falsely marketedas "the solution". Take the case of ``restoration of traditional water bodes". There i s a great attraction to the notion that redscovery of "Dying Wisdom" (the title of a book184 by And Aganval and Sunita Narain of the D e l h i Centre for Science and the Environment) will provide the cures to the water IUS that afflict modern India. There i s a large and active movement which sees community "rainwater harvesting" as the solution, everywhere and for all problems (almost). Deeper investigations show that it isn't quite so. David Mosse's detailed anthropological investigation1*5 into the social ecology of the tanks of southern India draw a m u c h more complex picture, showing that the tanks were in steep decline long before the advent of canal irrigation (the ostensible cause of the loss of traditional wisdom) and that they were a solution well suited to a particular demographic and social situation which has long gone. S d a r l y , objective evaluations (described earlier) of watershed management efforts in India show some, but rather h t e d , success. Applying the powerful words of Judith Tender186 from another context (the analysis of Social Funds) "The reason for (their) popularity ...relatesto their effectiveness as a powerful "development narrative". Inenvironments with great ambiguity as to cause and effect, such narratives offer convincing and simple explanations for the causes of certain problems and provide appealingly straightforward blueprints for action. Because of their power as narrative, these accounts are rather invulnerable to empirical evidence that challenges their accuracy". T h e point i s not that these community-based efforts have no role to play -they do, and an important one at that in some circumstances. T h e point here i s that they can never b e a "silver bullet" in an increasingly urbanized and industrial society which needs a host of different kinds of actions. What i s clear i s that the most effective responses to the water challenges in India are going to vary very widely and are going to require a host of interventions, of all different scales. As suggested by the "Stages of water development" in Figure 1, the major instrument i s not going to be infrastructure alone, but management supported by both old and new types of infrastructure. "Management" i s going to mean systemic sets of legislation, capacity building, organizational change and the use of entitlement, pricing and regulatory instruments. And it i s not going to b e the task of government alone, but concerted and reinforcing actions by a host of stakeholders. But that there were a silver bullet! A corollary of the previous rule is that there is a tendency when the silver bullet does not work (mixing metaphors badly) to throw the baby out with the bathwater. Dams (or rainwater harvesting or tank restoration) are propagated with missionary zeal, and when they do not deliver communities to the promisedland, they are stigmatized and it argued that they should no longer be part of the "toolkit". Take the example of dams. There i s an energetic and resourceful anti-dam lobby in I d a . Spurred by legitimate issues of inadequate resettlement, these groups - with their message magnified by Arundhati Roy's powerful prose187 -- have identifieddams as one of the ultimate evils on the world. There is, in their minds, no dam which ever should have been built in India -- even Bhakral88, which as described earlier, has been shown to have brought such massive benefits to the people of northwest India and beyond. Take another example, that of Water Users' Associations. T h e idea of W U A s transforming irrigation services has been and is, a powerful and persistent one, despite mountingand long-standing evidence that reality i s a bit more complicated. T h e Vaidyanathan Commission of 1991, for example, reports that "there i s a general consensus that efforts to actually organize farmers' groups and make them participate have not really made much of an impact". Sinular evidence from around the world notwithstanding, the idea has had remarkable staying power in the global water community, again, "because of their power as narrative, these accounts are rather invulnerable to empirical evidence". For some the case is clear: the idea of WUAs is partly a cruel trick played so that the more difficult issues - of real reform of the irrigation agencies - can be avoided. But the fact is that organized farmers &play a role in all successful irrigation schemes throughoutthe world, but only as a part of a set of reinforcing instruments, which always include water entitlements and accountable service delivery agencies. T h e W A Sshould not be thrown out with the bathwater but propagated as part of an overall reform package. T h e distinction between necessary and sufficient conditions for progress is a vital one. Politicians may not be the most revered figures in India (or elsewhere), but it i s they who are "in the game", who are elected to make crucial tradeoffs, and who have the critical role as judges and champions of reform. A discussion with politicians who have led water-related reforms throughout the world189 found general agreement in a "rule" articulated by Digvijay Singh, then-Chief Minister of Madhya Pradesh: "If it i s to work, water reform must be good politics". There i s evidence that this was, indeed, the case for community-based watershed management projects for Mr.Singh in Madhya Pradesh. And the intensive formation of W`As inAndhra Pradeshwas certainly politically useful to Mr.Chandrababu Naiduin Andhra Pradesh, because farmers perceived this to be a reform which moved in the right h e c t i o n . T h e bottom line i s that an essential element of any reform program i s that it must b e viewed as a "good thing" by sufficient numbers of people that they will consider voting for the politician who championed the reform. There are two important riders to this "rule". First, it is often quite difficult to judge how actions relating to water are being received by citizens. For example, anyone reading the English language newspapers of India would perceive that the Sardar Sarovar Project on the Narmada River is almost universally opposed. However a detailed analysis of press coverage by Sussex University190 showed that the picture was considerably more nuanced. "Environmental debate in India is governed by the language inwhich it i s presented and understood. T h e message coming out of India, most likely to be heard by the developed world, comes out of its Englishlanguage media, representing just 2% of the population. This elite group has adapted a pro-environment stance and is more likely to protest against n e w dams .... But inside India, the far bigger local language media representing the vast majority and poorer sections of society are expressing the heart-felt cry for development" Second and related, i s the fact that on any reform proposal there wlll be a cacophony of voices. Montek Ahluwalialgl has described this well: "Sometimes Ifeel as if there's a completely false assumption that if only you talk to everybody you will get an agreement . Only on a very boringissue or in a very boring country would you find that. To my mind the debate need for political risk.. . At the end the government has to take the risk . ..."....Inshort, while Does not eliminate the all voices must be heard, much greater weight must be given to the voices of those who have responsibhty and face the voters, and less weight to those who are self-appointed or who represent small special interests. T h e World Bank has been involved in the water sector in India for 50 years and has lent about $14 bdllon for water projects in India192. The very first Bank-financed project, the Damodar Valley Project, approved in 1954, was inspired by the TVA model, and aimed at buildingwater infrastructure and institutions which would provide a springboard for economic growth and poverty reduction in a poor region. From the Bank`s perceptive this was (and would be today) an ideal project - it was a vehicle for bringing the best ideas from other countries and adapting them to India; it was a combination of infrastructure and institutional developments. There were very clear benefits. T h e project did finance infrastructure which has provided power, flood protection and irrigation services to the regon. And the project was instrumental in the formation of the Damodar Valley Corporation in the 1950s. But there were failures, too. The DVC turned out to be quite different from the TVA, with states clawing back major activities and the DVC ending up as basically a power generation company with little responsibhty for water managementl". And there was no demonstration effect, with no other river basin organizations following the DVC model. (In fact not a single river basin authority has been established under the 1956 River Boards Act.) In many ways the Damodar Valley Project presaged half a century of Bank experience with water development and management in India, an experience in which the defining quality i s the contrast between lofty aspirations and modest achievements. Paraphrasing Akhter Hameed Khan, the great Pahstani reformer194, it might be said that the Bank`s involvement in water in India has been one in which the Bank "has chased the rainbow of well- functioning institutions and dreaded the nightmare of further institutional decay.. .. andthat only the boldest among u s can say that we may not b e s d a r l y engaged tomorrow". Over the last five years there have been two major reviews, one by the Bank in the context of the n e w Water Strategy1g5 and one by the Operations Evaluation Department. In both cases the reviews included major consultations with a wide variety of stakeholders in India. Since these earlier reports are published, and the results presented in detail in the background paper by Malik, in this Report it i s necessary only to summarize the main messages and lessons. First, there are different perspectives about the influence of the World Bank on the water sector in India. On the one hand there i s the view that since the Bank accounts for only between 6% (Sekhar, background paper) and lOYO196of what i s spent in the water sector inIndia, the Bank i s a minor actor. On the other hand, since most of water expenditure by the Unionand State governments inIndia is for fixed costs (especially personnel) the Bank funds a much larger portion of discretionary expenditure and of n e w investments. And the Bank has been, and continues to be, by far the biggest external donor, accounting for 72% of donor lending and grants for water'". Where there i s general agreement i s that, as it should be, the Union and State Governments are the ones who determine what will happen and how it dhappen. The Bank's role is necessarily and properly one of trying to put ideas on the table, to b e a partner to efforts at improvingperformance. This i s an important role but necessarily and properly control i s in the hands of the elected governments at the national and state levels. Second, mirroring a s d a r pattern for World Bank lendmg worldwide'", there was a sharp decline (Figure 63) in the proportion of lending going to water projects - from 25% in the early 1990s to about half that amount over the last five years. Irrigation Urban 0 Rural 0 Hydro Water Resources1 1800 I----- 1 -.o*E 1000 E 1400 1200 tft 5 800 600 400 200 0 1993-98 1999-04 Figure 63: The decline and changing composition of World Bank lending for water in India There was also a marked shift in Bank lending (see Figure 63) out of complex areas which were perceived to be "reputationally risky" for the Bank (especially in the light of the controversies surroundmg the Bank's engagement with the Sardar Sarovar Project). There was no lendmg for hydropower (with the last project financed by the Bank being approved in 1987, the 1500 mw run of the river Nathpa Jhakri Project on the Sutlej River). There were sharp reductions in lendtng for irrigation, urban water supply and stand-alone water resources project, with the only increases being in the uncontentious area of rural water supply. There was great dissatisfaction among government officials in Indla who believed, as &d developing countries throughout the world199, that the Bank was walking away from the area where the needs were great (infrastructure) and where the Bank had a strong comparative advantage, namely in addressing complex, dfficult issues such as water resources development and management. A subsequent major "global poll" of opinion-makers throughout the world reaffirmed - see Figure 64 for South Asia - that this is where countries perceived the greatest need, and the strongest case for World Bank involvement. 20 Education 15 Infrastrudure 10 5 0Social 0 Prioritythat should be given bythe Bank (Table 6) Figure 64: The "global poll" results for South Asia, showing that infrastructure and education were the two areas which were of high Third, these reviews, earlier major analytic assessments by the WorldBank in 1991200 and 1998201and the assessment in the twelve background papers by eminent Indian professionals have concluded that the infrastructure constructed with Bank funding has made major contributions to India's food security, energy production and urban development, but that all efforts at improving institutional performance have been only modestly successful, at best. A few quotes from the latest OED report give the flavor: a) of persistent institutionalshortcomings "... performance of completed Bank water projects has been unsatisfactory because of over-optimistic appraisal" "...the states' unwillingness to tackle institutionaland financial reform.." "...Much s t d l remains to be done on developing sustainable mechanisms for water allocation and management.. ." "...sooner or later state governments must address subsidy issues and right-size public sector agencies to increase efficiency". "For fiscal reform to succeed, sooner or later state governments must address reducing the size of public sector agencies and ensuring good governance that allows the private sector, including users' groups, to take a greater stake in water planning and management . " b) Of recommendations by the Bank that specified large numbers of priorities and &d not focus on a practical reform path: "The Bank's 1998 review lays out a very ambitious and detailed agenda that ...contains more than 80 national and intersectoral recommendations aimed at the central and state governments, and more than 170 for the main subsectors. "institutions and practices that have remained unchanged for decades are to be tackled and changed quickly - an approach to institutional reforms that fies in the face of institutional realities and the political wdl such as they exist in India today." 0 "The Bank risks spreadmg its resources too thinly to be effective. A m o r e selective and incremental approach to key policy and institutional reforms mightb e more productive." c) of a slow movement away from a normative approach to one which focuses on incentives and the political economy of change: 0 "The 1998 review found that little had changed since 1991: "in recent years there has been realization and policy pronouncements regarding the need to address these problems; however the policies have not been translated into action." 0 "There has been headway on reform of water institutions in the few reformist states where there i s political dto change after decades of malaise -butin some the reforms appear to be cosmetic." "The missing element i s how to identify and promote incentives that d lead to sustainable and effective reform. Only then can the critical next step b e achieved: agreeing on the three to five short to medmm-term priorities on which to focus efforts." The Bank"s,newWater S4mtekgy Inparallel with these reviews of World Bank engagement inwater in India, and influenced by them, the World Bank developed a new Water Strategy, which was approved by the Board of the Bank in 2003, and set a new duection for Bank engagement in water throughout the world. The main messages of the 2003 Water Strategy are: Water resources management and development i s central to sustainable growth and poverty reduction and therefore of central importance to the mission of the WorldBank Most developing countries need to be active both in management AND development of water resources infrastructure. T h e main management challenge i s not a vision of integrated water resources management but a "pragmatic but principled" approach that respects principles of efficiency, equity and sustainabhty, but recognizes that water resources management i s intensely political, and that reform requires the articulation of prioritized, sequenced, practical and patient interventions. T h e World Bank needs to assist countries in developing and maintaining appropriate stocks of well-performing hydraulic infrastructure and in mobhing public and private financing, while meeting environmental and social standards. the World Bank dre-engage with high-reward/high-risk hydraulic infrastructure, using a more effective business model. T h e Bank`s water assistance must b e tailored to country circumstances and be consistent with the overarching Country Assistance Strategies. T h e World Bank has recently commissioned major surveys of opinion leaders to help identify areas which were of high development priority and where the Bank was perceived as having a comparative advantage. Confuming the results of the "global poll" discussed earlier, these surveys (Figure 65 shows the South Asian poll of 2005; the Indian poll of 2004 produced very s d a r results) again showed the areas associated with water to b e of highpriority and highBank effectiveness. 3 5 .___. . _ _ Bank good, but issue not Bank good and issue is 3 4- perceived to be a priority a priority Private Sector. *Education Gender Disparities 'Water Resource Dev. 3.1 Sector *Economic Growth .-a> =w c 3.0 - Regulatory Framework. .Natural Resources Management ,Access to Heaith Services ReducePoverty C m 2.9 - Urban Quality Of Life* Protect the poor. 7 *Safeguarding against Corruption a I2.8 Transparency in Governance - Decentralization *Rural Quality of Life Policies Accountability in Public Sector" Public Funds 2.7 - 2 6 Bank not good. and issue not perceived i o be a priority 2 5 - 3.6 3.7 3.8 3.9 , 4.0 4.1 4.2 4.3 4.4 Mean Importance Aqked on a wale o f 1-5. 1 heine not imnortant at allhot effective at all. 5 heine verv imnortantherv effective. Figure 65: bevelopment priorities and comparative advantage of the World Bank Source: World Bank SouthAsia Client Survey, 2005 I In September 2004, the Government of India and the World Bank finalized 1 1 a Country Irrigationa Urban a Rural Hydro Water Resources Assistance Strategy, the I "contract" which spells out indicative Bank lendmg for the period 2004-2008. The CAS represents a dramatic change in the Bank's engagement with water (Figure 66), with overall water lending predicted to rise from about $700 d o n over the previous 1993-98 1999-04 2005-08 four years to about $3200 d o n in the next four years. As shown in Figure 66, too, there are Figure 66: World Bank re-engagement with water in India major changes in composition, with the Bank expecting to sharply increase irrigation and water resources lending, and re-engaging with large hydropower projects. T h e 2004 CAS makes two other important strategic shifts which affect water. In the last CAS period the Bank focused heavily on "reforming states" which were mostly in the south and mostly among the better-off and better-governed. (In this period about 50% of Bank water lendmgwent to the southern states, who contain only 20% of the population.) Now the Government and the Bank have agreed that the Bank WLLl re-engage more intensively with the poorer states (where needs are greater but governance i s also worse). This adjustment is understandable, but it also implies even greater difficulties for the institutional reform agenda which lies at the heart of Bank engagement. This is so because it i s unrealistic to expect water governance to be good when overall governance i s poor; and thus it is likely that the already-difficult task of reforming water governance (whch has not been very successful even in the "advanced states") wdl become more difficult s d . In the current CAS, then "rules of engagement" for different sectors have replaced "focused states" as the primary filter which will determine whether or not the Bank engages. The "rules of engagement" for the various water- related sectors are as follows: Irrigation - de-linkmg irrigation services and water resources management, reform of irrigation agencies, strengthening cost recovery, regulation, beneficiary participation, increased productivity of water, water entitlements. Urban water and sanitation: Utlllty Reform, improving Services to the poor, and private sector participation; Rural water and sanitation: Continue demand responsive approach, moving from pilots to scale throughCentrally Funded Schemes (SWAPS); Hydropower -O n e element in an overall energy program; Bank will engage with hydro that has h t e d environmental and social impacts; Water Resources - Developing information systems, rehabilitating and modernizing major infrastructure, watershed management, water rights, capacity building. T h e analysis in this Report suggests that these "filters" are generally appropriate, with minor adjustments. T h e fest adjustment would b e to de-emphasise some of the recommendations on organizational form (such as de-linhng agencies responsible for irrigation and water resources management) and putting greater emphasis on (a) instruments, including entitlements, contracts between providers and users, transparent monitoring and benchmarhng, and regulation and (b) on charting sequenced, prioritized paths for m a h n g pragmatic improvements. As part of the process involved in developing this report, the Ministry of Water Resources held two major consultation with the Ministry of Finance and other Union Ministries, and with State Governments, to discuss the evolving role of the Bank. T h e second of these consultations culminated ina set of agreed "recommendations"202. There was strong endorsement of the re-engagement of the Bank in the full range of water-related issues, includmg the big and the complex. There was agreement that the government needed to complement its traditional focus on infrastructure with a growing emphasis on management. I t was agreed that the Bank needed to continue to emphasize institutional reform, and m u c h discussion (and differing views) of some of the key instruments such as water entitlements and user charges. I t was agreed that the Bank would consider a variety of capital investments (inflood control, tank rehabilitation, completion of irrigation projects, recharge etc.) in the context of state projects, with the critical test being the economic and social returns to such investments. Finally, two comments by senior Government of India officials at recent consultations held by the Government of India capture much of the essence of this Report. T h e Member of the Planning Commission responsible for water and energy stated: "when we do address management problems w e still think only in terms of instruments of command and control, not in terms of incentives that affect the behavior of uses, and the instruments - usufructory rights, prices, compensation - that affect this behavior."203 And the Secretary of Finance stated "the government will request Bank involvement only where the Bank adds value by bringngn e w knowledge and contributing to reform processes" These senior Government of India officials captured well the essence of this Report - of the challenges which face In&a as it faces an uncertain water future, and the World Bank as it tries to b e the best partner that it can be. 'Nirmal Mohanty. "Moving to scale", Background Paper for this Report, 2005. 2 Devesh Kapur, "India's Promise?" Harvard magazine, July-August 2005. 3 A.D. Mohle. "The evolution of national policies and programs", BackgroundPaper for t h s Report, 2005. 4 A . Sekhar. "The evolution of water developmentand management: the perspective of the Planning Commission", Background Paper for t h s Report, 2005. j A.D. Mohile. "The evolution of national policies and programs", Background Paper for this Report, 2005. 6 Deepak Lal, Cultural Stability and Economic Stamation: India 1500 B C - 1980 AD 7 In the evocative phrase of Arthur Maass and Raymond L.Anderson And the Desert Shall Rejoice : Conflict, Growth,andJustice inArid Environments, MIT Press, 1978 8 Anand Pandian. "An ode to an engmeer", inThe PenrminBook of Water Writings, edited Amita Baviskar, Penguin, India 2003. 9 A.D. Mohile. "The evolution ofnationalpolicies andprograms", BackgroundPaper for this Report, 2005. 10Peter Hazell. and C. Ramasamy. 1991. The Green Revolution Reconsidered: The ImDact of HighYieldmg Varieties in South India, Baltimore, Md. : The JohnHopkins University Press. 11 Ramesh Bhatia. Economic Benefits and Synergy Effects of the BhakraMultipurposeDam, India: A case study, WorldBank 2005 (draft). 12 Lant Pritchett (2002) "Where has all the education gone", WorldBank Economic Review, Vol15, No 3, pp 367-391. 13 R.P.S. Ma&. "Water and poverty", BackgroundPaper for this Report, 2005. 14 Peliekaan, J. 2002. India: Evaluating BankAssistance for Povertv Reduction. The WorldBank Operations EvaluationDepartment, Washington DC. 15 Ramesh Bhatia. `Water and Growth", BackgroundPaper for this Report, 2005 16 RobertChambers. Managing CanalIrrigation, NewDelhi 1998. 17 Peter Hazell. and C. Ramasamy. 1991. The Green Revolution Reconsidered: The Impact of HighYielding Varieties inSouth India, Baltimore, Md. : The John Hopkins University Press. 18 Ramesh Bhatia. Economic Benefits and Synergy Effects of the Bhakra Multipurpose Dam, India: A case study, World Bank 2005 (draft). 19 WorldBank, IndianIrrigation Sector Review, 1991. 2" Francois Bourgignon, Chief Economist of the World Bank. "High Growth Has Not Generated More Inequality, Says WB", Financial Express, January 2004. 21 Ramesh Bhatia. "Water and energy", BackgroundPaper for this Report, 2005. 22 Tushaar Shah "Accountable institutions", Background Paper for t h i s Report, 2005. 23 KyuSALee. Costs ofinfrastructure deficiencies inmanufacturinp inIndonesia. Nigeria andThailand.Policy ResearchWorkingPaper WPS1604, The World Bank, 1996 24 Omkar Goswami. "The urgent need for infrastructure", The Economic Times, Delhi, Apd 25,2005. 25 Ramesh Bhatia. "Water and energy", Background Paper for this Report, 2005. 26 Ramesh Bhatia. "Water and energy", BackgroundPaper for this Report, 2005. 27 Ramesh Bhatia. "Water and energy", Background Paper for this Report, 2005. 28 Ramesh Bhatia. "Water and energy", Background Paper for this Report, 2005. 29 WorldBank (2005), Gujarat, Agricultural Development For Growth andPoverty Reduction (draft) 3" Smita Misra Groundwater Challenges for RuralWater Supply inTamil Nadu, powerpoint presentation to South Asia Water Day, WorldBank, February 2005 31 Pravan K.Varma, BeingIndian, Penguin, 2004. 32 John Ridmg, "Heard it on the grapevine - S d Mittal made h i s billions by bringingphones to India. For h i s next project, the entrepreneur aims to connect h i s country's food producers to the rest of the world", Financial T h , 5 February 2005 33 "Marx or McKinsey", Indian Express, A p d l 8 2005. 34 For example Brazil, as documented in WorldBankWater Resources Sector Strategy 2003. 35 EdwardLuce. Cure for India's ruralwoes lies inabhty to escape the farm: Old family plots are witheringas a new report highlights exodus to cities and to manufacturing jobs. FinancialTimes, 7 December 2004 36 EdwardLuce. Cure for India's ruralwoes lies inability to escape the farm: Old famdy plots are withering as a new report highlights exodus to cities and to manufacturing jobs. Financial Times, 7 December 2004. 37 Pravan K.Varma, Beine I d a n , Penguin, 2004. 38 Ramesh Bhatia, Ramesh, JohnBriscoe, Ravinder PaulSingh hfalik, Lindy Miller, Smita Msra, Harshadeep Rao and K.S. Palinasami: `Water inthe Economy of Tamil Nadu: Flexible water allocationpolicies offer a way out of water-induced economic stagnation, and will be good for the environment and the poor". The World Bank, New Delhi, October 2004. 39 John Briscoe, Raw Water Supplies for Chennai, World Bank Back to office report, 1996. 40 "SIiX4 for allotment of additional land for Textile ProcessingPark "; 25 April 2005, Business Standard 41 Alain Locussol, "Halving b y 2015 the Proportion of the People inIndia without Sustainable Access to Safe DrinkingWater and Basic Sanitation", draft report, World Bank 2005. 42 The ReDort of the National Commission for Inteerated Water Resources Develoument, Ministry of Water Resources, N e w Delhi, 1999 43 A.D.Mohile. "The evolution o fnational policies andprograms", BackgroundPaper for this Report, 2005. 44 George Varughese. "Water and environmental sustainabllity", BackgroundPaper for thts Report, 2005. 45 GwynRees andDavidCollins. "An assessment of the potentialimpacts ofdeglaciation on the water resources o f the Himalayas". Draft Report, HRWalhngford, April 2004.t a1 46 Barbara A. &filler, A. Whitlock and R.C. Hughes. "Flood Management - the TVA experience", TVA, Oak Ridge, 1998. 47 h u n Nishat powerpoint presentation on FloodManagement inBangladesh, WorldBank Water Week 2005 48 The Economic Times "Growth surge: No longer a gamble on the monsoon", March 2005. 49 Albert 0.Hirschman, ExitVoice and Loyalty: Responses to Decline inFirms. Oreanizations. and States, Harvard University Press, 1971 50 The Oxford Dictionary of EnslishEtvmolopy 51 ;"yw Chitale. "The fight for water", ICID, N e w Delhi, 1997. 52 `Water Mrnistry seeks World Bank funding for reforms", The Hindu,January 13, 2005. 53 N.D.Gulhati. IndusWaters Treaty: An ExerciseinInternational Mediation, AlliedPublishers,NewDelhi 1973. 54 Tariq Karim. "The Bangladesh-India Treaty on Sharing of the Ganges Waters". Bangladesh High Commission, Pretoria, November 1997. Jeremy Berkhof. ."Hydropower inBhutanand Nepal: Why the Difference?", draft paper 2003. 56 A. Sekhar. "The evolution of water development and management: the perspective of the Planning Commission", Background Paper for this Report, 2005. 57 A.D. Mohile. "The evolution of national policies and programs", BackgroundPaper for this Report, 2005. backgrounddocument 58 Maria Saleth. `Water rights and entitlements", BackgroundPaper for h s Report, 2005. 59 "Terrorism will be back if verdict goes against Punjab inS Y L row" Times of India, July 27,2004. 60 Maria Saleth. `Water rights and entitlements", Background Paper for h s Report, 2005. 61 Nirmal Mohanty. "Moving to scale", Background Paper for this Report, 2005. 62 Himanshu Thakkar "Flood of nonsense: How to manufacture consensus for river-linking", Himal, 16/8 August 2003 page 27. 63 AD.Mohile. "The evolution ofnationalpolicies andprograms", BackgroundPaper for this Report, 2005. 64 DVDuggal at lMinistry ofWater Resources, Workshop on River Basin Management, New D e b ,January 27, 2004. 65 Jayalalitha inThe HinduAugust 2003 66 Sunita Narain, "The drought within", Business Standard, New Delhi, August 3,2004. 67 Chattrapati Singh Water Rights in India, pp 8-30, inWater L a w inIndia. 68 Sudhirender Sharma, "Rainwater harvesting has yet to protect India from drought", Waterlines, Vol21, No 4, April2002. 69 Arya, SwaranLata andJSSamra. 2001. RevisitingWatershed Management Institutions inHaryana Shivaliks, India. Chandigarh: Central Soil and Water Conservation Research and Training Institute and KerrJohn, Ganesh Pangare, V.K.Pangare and P.J.George. 2000. An evaluation of DrylandWatershed Development Project inIndia. EPTD DiscussionPaper 68, International FoodPolicy Research Institute, WashingtonDC. 70 R.P.S. Ma&. `Water and poverty", BackgroundPaper for this Report, 2005, and KerrJohn, Ganesh Pangare, V.K.Pangare and P.J.George. 2000. An evaluation of DrylandWatershed Development Project inIndia. EPTD Discussion Paper 68, International FoodPolicy Research Institute, Washington D C . 71 Sudhirender Sharma, Watersheds. Waterlines 2004 72 The National Commission for IntegratedWater Resources Development, Ministry of Water Resources, New D e b , 1999 73 "Three farmers killed, thirty hurt inpolice firing". Indian Express, 27 October 2004 74 V.S. Vyas. "Principled pragmatism, or the political economy o f change", BackgroundPaper for this Report, 2005. 75 V.S. Vyas. "Principled pragmatism, or the political economy of change", BackgroundPaper for this Report, 2005. 76 GTK Pitman, OED, India: World BankAssistance for Water Resources Management. 2002. Bank investment has been about 10% of India's investment, and the Bank has invested $12 bilhon since 1960. 77 A. Sekhar. "The evolution of water development and management: the perspective of the Planning Commission", Background Paper for t h s Report, 2005. 78Australian experience shows that the average "renewals annuity", which includes the cost of both replacement and operations and maintenance, "is about 3% to 4% for older, and 2% to 3% for newer assets". Personal communication, Golbourn Murray Water and the Murray DarlingBasin Commission, 2005. 79,4. Sekhar. "The evolution of water development and management: the perspective of the Planning Commission", Background Paper for t h s Report, 2005. 80 R.P.S. Ma&. "Water and poverty", Background Paper for this Report, 2005. 81 A. Sekhar. "The evolution of water development andmanagement: the perspective of the Planning Commission", Background Paper for this Report, 2005. 82 NirmalMohanty."Moving to scale", Background Paper for h s Report, 2005. 83 Mr.Kirloskar, CEO ofKirloskaar at FICCI seminar onLinkingRivers, NewDelhi2004. 8.1Rakesh Mohan, then Deputy Governor of the Reserve Bank of India, at the MumbaiRBI Conference on Infrastructure, 2004. 85 Ramesh Bhatia. "Water and energy", BackgroundPaper for this Report, 2005. 86 BBarbaraA. M e r , A. Whitlock and R.C.Hughes. "Flood Management -the TVA experience", TVA, Oak Ridge, 1998. 87 Qiu Zhongen of the Changjiang Water Resources Commission titled "Study on the Comprehensive economic Benefits of the Three Gorges Project", presented at the UN Conference on Hydropower and Sustainable Development, October 2004. 88 George Verghese, Waters of HoDe, Oxford and IBHPublishing,N e w Delhi 1999. 89 Walter Langbein, "Water Yield and Reservoir Storage inthe United States", USGS Circular, Washington D C 1959. 90 Thinus Basson, Department of Water Affairs and Forestry, Pretoria, personal communication 91 A. Sekhar. "The evolution o fwater development and management: the perspective o f the Planning Commission", Background Paper for this Report, 2005. gives the data. Up untilMarch 2003 Rs 85 +Rs = 30 Rs 115 billion hadbeen spent to create 2 millionhectares of irrigatedarea. Unit cost is thus about Rs 60,000 per hectare. The remaining 8 d o n has would therefore be expected to cost roughlyRs 480 bdlion, or roughly$10 btllion 92 India Water Partnership and Institute For H u m a n Development, "India Water Vision, 2025", IHD, 2000. 93 A. Sekhar. "The evolution ofwater development and management: the perspective of the Planning Commission", BackgroundPaper for this Report, 2005. 94 A. Sekhar. "The evolution o fwater development and management: the perspectiveof the Planning Commission", BackgroundPaper for this Report, 2005. 95 Smita Misra, World Bank, personal communication 96 Sunita Narain and Suresh Babu "The political economy of defecation", Down to Earth,Apd 30,2005, pp 22 -33. 97 A.D. Mohile. "The evolution of national policies and programs", BackgroundPaper for t h s Report, 2005. 98 A. Sekhar. "The evolution of water development and management: the perspectiveof the Planning Commission", Background Paper for this Report,2005. 99 Omkar Goswami. "The urgent need for infrastructure", The Economic Times, D e h , Apnl25,2005. 100 The Sarkaria Commission ,in A. Sekhar. "The evolution o fwater developmentand management: the perspective of the PlanningCommission", BackgroundPaper for tlus Report, 2005. ~~ 101 Vaidyanathan Committee, Report of the Committee on Pricing of Irrigation Water, PlanningCommission, N e w D e b , 1992. 102 The National Committee on Integrated Water Resources Management, 1999 103 Tushaar Shah "Accountable institutions", BackgroundPaper for this Report, 2005. 104 Sunita Narain, "The drought within", Business Standard, New Delhi, August 3,2004. 105 ArunShourie Governance and the Sclerosis that has set in. Rupa and Company, N e w Delhi 2004, page 21. 106 A.D. Mohile. "The evolution ofnational policies and programs", BackgroundPaper for this Report, 2005. 107 Kirit Parikh at the Muustry ofWater Resources National Meetingwith the States, NewDelhi, 2004. 108 Douglass C. 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Privatization of Water Services inthe United States: An Assessment o f Issues and Experience, Washington D C 2002. 117 Mohanty 118 Morris 119WorldBank. The Environment and Development. The WorldDevelopment Report, 1992. Washmgton DC. 120 Sebastian Morris. "Pricing and fmancing", BackgroundPaper for this Report, 2005. 121 Nirmal Mohanty. "Moving to scale", BackgroundPaper for this Report, 2005. 122 V.S. Vyas. "Principled pragmatism, or the political economy of change", BackgroundPaper for t h i s Report, 2005. 123 A . Sekhar. "The evolution of water development and management: the perspective of the Planning Commission", Background Paper for this Report, 2005. 124 I C I D and others benchmarkmg 125 Asian Development Bank, Utilities Data Book, Manila 2003. 126 Public Affairs Centre. "Towards user report cards on irrigation services: Learning from a pilot project in India". Bangalore, December 2002. 127 Manuel Contijoch, personal communication 128 Chattrapati Singh, Water Rights in India, inWater Law in India 129 World Bank, Water Resources Stratew, 2003, Washington D C 130 Chattrapati Singh, Water RightsinIndia, inWater Law inIndia 131 Chattrapati Singh, Water Rights inIndia, inWater Law inIndia 132 Maria Saleth. `Water rights and entitlements", Background Paper for this Report, 2005. . Backgroundpaper andJohnBriscoe. "Managing water as an economic good: Rules for reformers", Water SUDD~V15 (4), 1997. 133 Maria Saleth. `Water rights and entitlements", BackgroundPaper for this Report, 2005. 134 Maria Saleth. 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